Our experience suggests that many Tax Payers not optimising their capital allowances position and are therefore missing out on the tax savings and associated cashflow advantages potentially available to their business.

At Capsure Tax we can undertake a Capital Allowances Review of your business which will either validate your current approach to capital allowances compliance or identify value improvements which could potentially generate significant tax savings for your business.

Our Tax and surveying expertise means we can undertake a forensic review of historic capital expenditure and benchmark your capital allowances recovery against other comparable projects in your industry sector e.g. office fitting out works.

Capital Allowances

Capital Allowance Super Deduction

On 03 March 2021 in order to encourage business investment following the Covid 19 pandemic, the Chancellor announced the introduction of the capital allowances super deduction.

This relief will take the form of a new 130% first-year capital allowance for qualifying plant and machinery assets; and a 50% first-year allowance for qualifying special rate assets.

From 1 April 2021 until 31 March 2023, companies investing in qualifying new plant and machinery assets will be able to claim:

  • a 130% super-deduction capital allowance on qualifying plant and machinery investments
  • a 50% first-year allowance for qualifying special rate assets

The super-deduction will allow companies to cut their tax bill by up to 25p for every £1 they invest.

These allowances will be available alongside the ongoing Annual Investment Allowance (AIA) which already gives 100% relief for costs of qualifying plant and machinery in the tax year of purchase.

The AIA has been set at £1m per business again for the year to 31 December 2021.

The capital allowances super deduction is only available to companies subject to corporation tax and individuals, partnerships and LLPs, are excluded.

In addition the super deduction is only available where the contract for the plant and machinery (including fixtures installed under a construction contract) was entered into after 3 March 2021 and expenditure is incurred after 1 April 2021.

Unlike the annual investment allowances, there is no limit or cap on the amount of capital investment that can qualify for either the capital allowances super deduction.

There are certain provisions for clawback of the relief if the asset is disposed of prior to 01 April 2023 and the Tax Payer needs to be aware of the how the provisions of the legislation apply prior to a disposal being made.

Capital Allowances UK