The 31st March 2023 marks the end of the 'Super-Deduction' whereby businesses can claim 130% capital allowance on new plant and machinery costs. But what will this mean for small businesses?
For more information on Super-Deduction, create a Capitalise for Business account and connect with a Funding Specialist.
What is a 'Super-Deduction'?
Branded as the 'biggest business tax cut in modern British history', this capital allowance allows businesses to reduce their tax bill by 130% of the cost of qualifying new asset investments including:
- Manufacturing assets
- Vans, lorries, trailors
- Cranes, diggers, excavators
- Production equipment, robotic arms
- Tractors, combine harvesters, crop sprayers
- Solar panels
- Electric vehicle charging points
- And more...
This means that for every £1 spent on new assets, 25p can be saved in corporation tax.
For example, an investment of £100,000 in new equipment will result in a super-deduction of £130,000 against taxable profits.
What are the benefits of 'Super-Deduction'?
As profitable businesses are set to pay more Corporation Tax come April 2023, being able to take advantage of this allowance whilst on a lower tax rate can lead to substantial savings. Using the example above, and applying the current corporation tax rate of 19%, you would achieve savings of £24,700.
How can Capitalise help?
With your Capitalise for Business account you can access over 100 lenders, many of which offer finance products for the assets included in the Super-Deduction. Over the past few months we have seen an increase in Asset Finance enquiries, many of which from businesses looking to benefit from the super-deduction before it comes to an end.
The potential savings made can help pay towards the interest on a facility. In fact, in some instances it could potentially cover the whole cost of a hire purchase agreement offered by a high street bank.
Am I eligible to claim 'Super deduction'?
Qualifying businesses must:
- Pay corporation tax
- Invest in new and unused plant and machinery assets before 31st March 2023
These assets can be funded by a hire purchase agreement or via other types of asset finance, subject to meeting certain additional conditions.
Create your Capitalise for Business account for free today, and book a meeting with one of our dedicated Funding Specialists.
Alternatively, please speak to your accountant about how you could benefit from the 'Super-Deduction' allowance.
