For companies who purchase new machinery and plant, there are now “super” capital allowances that can be claimed. This is also available on new fixtures and fittings but to a lesser extent.
These allowances give companies a deduction of 130% of the cost for the plant and machinery in the year of purchase. There will also be a 50% deduction for the cost of qualifying fixtures and fittings in commercial buildings.
For example, if you plan to purchase a new delivery van for the cost of £50,000, you will be able to claim a deduction against profits of £65,000 in the year of purchase. However, it is important to keep in mind that the super allowance cannot be claimed in the year that your business stops trading. We can help you determine which fixtures will qualify, so do not hesitate to contact us to discuss this further.
The Conditions For Claiming The Super Allowance
The new allowances come alongside strict conditions. Firstly, the item purchased must be brand new and not second-hand, it cannot be a car, and the item must not be bought with the plan of hiring it out. The allowances also only apply to expenditure incurred by companies between the 1st of April 2021 and the 31st of March 2023. As the main corporation tax is set to rise to 25% on the 1st of April 2023, this allowance has been introduced as an incentive to invest in new equipment before then.
Companies will need to identify each separate item that was subject to a super capital allowance claim as if it is sold later, some of the allowances may have to be clawed back.
Unfortunately, unincorporated companies cannot claim these super capital allowances. They can, however, claim the 100% annual investment allowance on most items of plant and equipment; this does include second-hand equipment.