The Super Deduction for Tax is coming to an end!
Did you know of Sunak’s super-announcement?
The Super Deduction for Tax!
Now I’m not an accountant and don’t profess to fully understand, but I do understand that it saves businesses money which can’t be a bad thing.
Back in April 2021 the Super Deduction came into effect, but like all good things, there must be an end. And that end is 31st March 2023.
As I said, I’m not an accountant, I deal more with technology but even I’m trying to fully understand the jargon to break it down in layman’s terms. Here goes:
What is Super-Deduction for Tax?
Let’s start at the beginning. Standard Corporation Tax is 19%. This is the amount you get back when you make an asset investment (please note this does not apply when buying stock to resell). So, the Super Deduction has been set at 30% (until 31st March 2023) to help business to improve and bring any investment forward.
How do I work out the Super Deduction?
Standard Corporation Tax Relief is 19%. If you buy new assets for the business, you can claim 100% of the VALUE and benefit from 19% Corp Tax.
Add the word SUPER in front of Corporation Tax and you can claim a whopping 130% off the value of new assets for the business.
If you take £10,000 as an example:
So, if you’re a Corporation Taxpayer, use the 130% figures.
130% of £10,000 = £13,000
At the beginning of this article, I did state that I didn’t 100% fully understand, and if like me you don’t either but would like to know more then let me know and I’ll introduce you to a man who does and can explain it to you.
Are you eligible for the Super Deduction?
Do you pay Corporation Tax, then there’s a good chance you are. Those that aren’t are Sole Traders and Partnership businesses. The Super Deduction will be most exciting for Manufacturing, Construction and Farming (big machinery type businesses).
What’s the reason behind the Super Deduction?
Since 2008 productivity growth in the UK has been decreasing. The idea behind the SUPER-TAX is to help generate new capital allowance, to hopefully enable the UK to be more competitive and increase productivity.
What qualifies under the equipment list:
So, whilst there is not an exhaustive list, qualifying assets can generally be defined as:
- Solar panels
- IT equipment and servers
- Tractors, lorries, vans (excluding cars)
- Ladders, tools
- Cranes
- Office chairs and desks
- Electric vehicle charge points
- Refrigeration units
- Compressors
- Foundry equipment
Please remember that Super Deduction is an option, you don’t have to purchase in the period. To claim the Super Deduction, you must purchase NEW assets for your business (not stock to be sold). Another great note is to keep documentation as proof.
For more information from the UK Government – gov.uk/guidance/super-deduction
Where accountants can help:
If you already knew about the Super Deduction, then your accountant is doing a great job. If you weren’t aware of the Super Deduction, then you’ve missed out.
If this is the case and your accountant isn’t helping you forecast and plan potential investments, work the best cashflow tax plans, then let me know. I can introduce you to a man that can.
Contact Me
If you want to ask me any questions or have a private chat, you can book my calendar here: https://cara.uk.com/robertgibbons
