Companies can now claim ‘super’ capital allowances on the purchase of new machinery and plant and to a lesser extent on certain new fixtures and fittings.
These super allowances give the company a deduction of 130% of the cost in the year of purchase for plant and machinery and a 50% deduction for the cost of qualifying fixtures and fittings within commercial buildings. We can help you to determine which fixtures will qualify.
If your company is about to purchase a new delivery van for £50,000 it will be able to claim a deduction against profits of £65,000 in the year of purchase. But beware; the super allowance cannot be claimed in the year the business stops trading.
There are strict conditions for these new allowances; the main one being that the item acquired must be brand new (not second-hand) and cars do not qualify. Also, the equipment must not have been acquired in order to be hired out. The super capital allowances only apply to expenditure incurred by companies between 1 April 2021 and 31 March 2023. The main corporation tax rate is due to increase to 25% on 1 April 2023 and this allowance is an incentive to invest before that date.
Unincorporated businesses cannot claim the super capital allowances but they can claim the 100% annual investment allowance on most items of plant and equipment, including on the purchase of second-hand equipment.
You need to be able to identify separately each item that was subject to a super capital allowance claim as if it is sold later some of the allowance may have to be clawed back.
