If you run a Ltd company now is the time to invest in plant and machinery as part of the super-deduction scheme. All qualifying investments will receive 130% capital allowance tax benefit.
As part of the spring budget the Chancellor announced the new super-deduction scheme which is now live. This scheme is designed to kickstart business investment which has dwindled since the Covid-19 pandemic, and runs from 1st April 2021 – 31st March 2023.
Example of a super-deduction in practice:
Ltd company invests £10k in plant and machinery.
The previous approach would be to use the annual investment allowance and receive £10k capital allowance within the first year. This would result in a corporation tax benefit of £1,900.
Using the new super-deduction method means claiming £13k deduction on the initial £10k investment. This would result in a corporation tax benefit of £2,470, an increase of £570 against the previous method.
What is plant and machinery?
Most tangible capital assets used in the course of a business are considered plant and machinery for the purposes of claiming capital allowances.
There is not an exhaustive list of plant and machinery assets. The kinds of assets which may qualify for either the super-deduction or the 50% FYA include, but are not limited to:
Computer equipment and servers
Tractors, lorries, vans
Office chairs and desks,
Solar panels
Electric vehicle charge points
Ladders, drills, cranes
Refrigeration units
Compressors
Foundry equipment
If you have any questions or need any guidance, please let me know and I will be happy to help.
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