On 31 March 2023 – i.e. in just over a month’s time – enhanced tax relief in the form of the fixed asset super-deduction and the 50% first year allowance on ‘special rate’ pool expenditure will end.
These were time-limited special measures introduced to encourage capital expenditure during the COVID-19 pandemic. Since 1 April 2021, UK taxpayers carrying on a business and investing in qualifying new plant and machinery assets have been able to claim:
- a 130% ‘super-deduction’ capital allowance on qualifying plant and machinery investments, or;
- a 50% first-year allowance for qualifying special rate assets.
Taxpayers may continue to avail of the Annual Investment Allowance (“AIA”) – being a 100% tax deduction for qualifying fixed asset expenditure – following the end of the super-deduction on 31 March 2023. However, this is less valuable than the super-deduction and AIA is capped to £1m of qualifying expenditure. The super-deduction is not subject to any cap and gives relief at 130% of capital expenditure.
This is while UK industry bodies including the CBI and the Institute of Directors are calling on Chancellor Jeremy Hunt to legislate to make the super-deduction permanent as part of his Spring Budget on 15 March 2023. Until such time as legislation is passed, the time to act is now.
It is not yet too late to take advantage of these enhanced reliefs and businesses currently considering significant capex spend may benefit from bringing forward this expenditure.
For further detail of how these reliefs work and how your business could benefit, please contact Huw Griffiths in our Corporate Tax team on 07496 410124.
Corporate Tax Director
M: +44 (0)7496 410 124 or