If you own a business and you’re able to, one of the things you need to think about is making the most of the Super Deduction Capital Allowance. Available until the 31st of March 2023, the extra capital allowance will allow your business to save money when purchasing equipment and can be a real help. No matter if you are a new business or have been around for a while, it is well worth looking into to help your business with saving costs. Here we take a look at what Super Deduction Capital Allowance is and how it can help you by applying ahead of the deadline next year.
What is the Super Deduction Capital Allowance?
The super deduction came into play the first of April 2021 and was set to last for two years. It means that any investments your business might make in things such as machinery and main rate plant will qualify for a capital allowance deduction of 130% as well as a 50% first-year allowance for qualifying special rate assets.
The Super Deduction Capital Allowance came about due to the pandemic and was to help businesses in a time that was more challenging than they had ever experienced before. It has been hailed as the best tax incentive for business investment and means you can essentially claim back 25p for every pound spent as long as it is spent in the right area. This was Chancellor Rishi Sunak’s aim to help “drive growth in the economy.”
According to the super-deduction fact sheet put forth by the treasury, “The super-deduction will give companies a strong incentive to make additional investments, and to bring planned investments forward.”
Does the Allowance apply to everyone?
You are eligible for the super deduction if your business spends money on the assets listed below. You cannot claim if you are a sole trader, individual, partnership or LLP. This is because it’s only available to those that are subject to and have to pay corporation tax.
If you’re not eligible, then you can probably still claim up to 100% under the Annual Investment Allowance for purchases of up to £1million which has been extended until March too.
What is included in the Super Deduction Capital Allowance?
‘Super-deduction’ includes all new plant and machinery that would ordinarily qualify for the 18% main pool rate of capital allowances (writing down allowances). Some examples of what is included are:
- Computer Equipment And Servers
- Tractors, Lorries, Vans
- Ladders, Drills, Cranes
- Office Chairs And Desks
- Electric Vehicle Charge Points
- Refrigeration Units
- Compressors
Expenditure such as company cars and second-hand plant and machinery is not included in the deduction so keep this in mind.
Like all tax related matters, this is really one for your accountant before making any decisions, however we will try our best to steer you in the right direction in the early stages of your buying process.
We don’t know whether this tax break will be extended come March, so with just a few months left, there has never been a better time to get those purchases in for your business in order to make the most of the deduction in capital allowance.
If you are thinking of buying any new equipment or commercial vehicles then you still have time and First Oak Capital can help you fund them. We are a knowledgeable and helpful company offering a range of business loans, asset finance and more. Get in touch with us on our website here today to find out more about how we can help and what we can do for you.
