The new super-deduction capital allowance has created a potential opportunity for limited company clients to boost their capital – as we highlighted in Part 1 of this blog post. By utilising the 130% capital allowance that super-deduction offers, and introducing clients to the flexibility of hire purchase, there’s potential for some significant capital savings.
But how do you spot the opportunities in the first place? And when is the best time to kickstart a client conversation around buying new assets and making use of super-deduction
Paul Surtees, Capitalise co-founder, explains the significance of the super-deduction and hire purchase opportunity and how Monitor helps you to start these conversations.
Putting super-deduction into action
Three months on from Budget 2021, we’re hearing anecdotal evidence that lenders are seeing an increase in asset finance lending. But, here at Capitalise, we’re still not seeing a marked rise in engagement around super-deduction from our accounting partners.
So, how is super-deduction landing in the marketplace? I spoke to Kayleigh Graham, Senior Partnership Manager at Capitalise, to see what the reaction is on the ground.
"There are definitely clients that are jumping straight on the super-deduction opportunity and are purchasing straight away. However, a lot of the feedback at the moment is that many businesses are working to two, three or five year cycles for replacing their equipment. So, a lot of the conversations with advisers are pre-emptive advisory conversations where the accountant knows that the client is purchasing in these cycles.
It’s about the firm explaining how they can support the client with these purchases, the benefits of the capital allowance and looking at the planning piece – and then booking follow-up calls as and when the purchase cycle begins so they can offer the right guidance at that point.”
Super-deduction expires in March 2023 – and that may seem like a long way away at this current point in time. However, deadlines can fly past pretty quickly, so factoring super-deduction into your ongoing client conversations ASAP is so important
How Monitor helps you to identify the client opportunities
With super-deduction, there’s a chance to come at the conversation from two angles. There’s the straightforward tax piece but there’s also the deeper, more strategic advisory piece.
Monitor, our client intelligence tool, is the perfect starting point for beginning these conversations. Monitor has moved on a fair way in recent months, and can now proactively help you to review your client portfolio and look for the super-deduction opportunities.
With cloud-enabled clients, we can extract the data out from your accounting platform and give you real, tangible insights and evidence via Monitor.
You can click on a client and then see the workflow on the right of the screen that represents their balance sheet, their profit and loss (P&L) and their current facilities etc.
The really useful part, though, is the Insights section, where we automatically flag up insights regarding the client’s financial position.
As an example of this, Monitor can show you clients that have high fixed assets on the balance sheet – a good sign that a client could benefit from super-deduction.
Finding the right time to introduce super-deduction to clients
With Monitor and Insights, you can begin to tell the story of the various opportunities that lie in your portfolio. If Monitor is pulling out clients with high fixed assets, what that does is flag up the super-deduction opportunity for you – and cuts out a lot of the sifting through your portfolio to find the most suitable clients for super-deduction conversations.
The platform also provides you with tips and hints for these conversations as well – so this is a real end-to-end offering, taking it from opportunity, to client conversation, to finding the right lender and agreeing on a hire-purchase agreement, through to buying the new asset.
If you’d like to maximise the hire purchase and super-deduction opportunity, get in touch with your Partner Manager to find out more.
There’s more information on the benefits of hire purchase here.