Chancellor Rishi Sunak recently announced, in a bid to boost the UK economy, the introduction of a new tax super deduction policy. In essence, the policy will run from 1st April 2021 until 31st March 2023 and is designed for companies who purchase specific capital assets, providing them with up to 130% tax relief in the first year.
Who can it help?
The super deduction tax scheme will assist any business that is investing in specific capital assets to support its ongoing growth. Companies can deduct the full value of qualifying assets from profits before tax. This tax relief will be applied in the same year as the assets are purchased, providing the added benefit of reducing the tax liability.
What is its key benefit?
The scheme has been designed to provide a much quicker tax relief on suitable investments up to the value of £1 million, enabling businesses to continue to invest and grow.
How much can you save?
A company can offset the full cost of new equipment purchased against the tax along with an additional 30%. So, for every £1 invested, a business can reduce its tax bill by 25p. To use a practical example if you invest £100,000 in new plant or machinery, then you will be entitled to claim a capital allowance of £130,000.
Where do I begin?
The first step of the process is to consult with your business finance broker. They can advise on the best type of business finance and explore the suitable options for you. At this stage they can also offer some advice and guidance on steps required for the super deduction tax.
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