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What’s all the fuss about super-deductions?

For any company that is subject to corporation tax, super-deductions are something you should be looking at very closely. Gov guidance notes can be found here.

Super Deductions were first announced in the 2021 budget in march, taking effect from 1st April 2021 and running until 1st April 2023. With little explanation or coverage of the topic, it was dismissed early on, however, once the finer details started to circulate it quickly became evident that it has great potential to increase investment and business growth.

The fundamentals of super deductions are:
  • A 130% super-deduction capital allowance on qualifying plant and machinery investments
  • A 50% first-year allowance for qualifying special rate assets

This gives companies the ability to cut their tax bill by up to 25p per £1 of investment.

Taking a look at the published examples in the government factsheet available here, it is not hard to see why the super-deduction scheme is a big draw for investment.

The types of assets that qualify for the 130% super-deduction are:

  • Plant
  • Machinery
  • Tooling
  • Computer Equipment
  • Furniture
  • Software (there has been some debate on this one, however, Capital Allowances CA23410 clears it up nicely)
  • Commercial Vehicles (vans/lorries etc. be aware cars are specifically excluded)

The assets that qualify for the 50% deduction are those with a long life expectancy, such as:

  • Air-conditioning and air-cooling systems
  • Hot and cold-water systems
  • Electrical systems, including lighting systems
  • External solar shading
  • Lifts, escalators and moving walkways
  • Thermal insulation of buildings

Both of these deductions come with stipulations and restrictions, the asset must be NEW and not used, for items under hire-purchase agreements you must have entered into the agreement after 1st April 2021 and you can only claim against the investment you have made towards the equipment, not the total value.

Refurbished or second-hand equipment does not qualify.

One of the areas of most interest for us is computer equipment and software. As these are often overlooked by a lot of businesses and only replaced when something breaks down. With the super-deductions available, you can guarantee your next breakdown will be the 2nd April 2023.

With all this in mind, we here at The Ideas Cupboard are offering to all our valuable customers a technical audit/review of their computer software and hardware. With our wealth of Technical Knowledge and Purchasing expertise, we can keep you at the forefront of your business sector in terms of Computing Support.

This audit will accomplish the following:

  1. It will help identify the life expectancy of your equipment and how much at risk your business is going to be if it fails unexpectedly.
  2. It will definitely benefit you in understanding if your equipment is right for your business going forward especially considering the changes many Organisations have had to make and plan to make over the coming months.
  3. Support your organisation with a replacement plan over the next couple of years to reduce the fears of doing nothing now but still take advantage of this generous Government led opportunity.
  4. We will certainly help you to customise your purchases to meet the demands of your business as you see them in the coming years.
  5. Support you to make the most of your investment opportunities and take advantage of the available tax breaks whilst they are here.

I urge you to get in touch today to start the process moving and make the most of this great investment prospect. Get in touch here.

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