The super deduction tax relief scheme in the UK is coming to an end soon.
So, if you’re planning to upgrade your tools of the trade, now would be an excellent time to do so.
Read on to discover how the scheme works, who’s eligible, and how much you can claim…
What is the Super Deduction?
Announced by then-Chancellor Rishi Sunak back in the 2021 budget, the super deduction scheme was established to boost investment, productivity and efficiency for UK businesses – especially after the hardship of 2020.
The scheme offers companies the rare opportunity to claim 130% tax relief on new plant and machinery, purchased before 31st March 2023.
Put another way, for every £1 you spend, your taxes are cut by up to 25p.
So, how does it work?
The scheme allows you to claim 130% tax relief on assets purchased before 31st March 2023.
Let’s look at an example.
Let’s say you purchase new kit at a total cost of £100,000.
In that accounting year, you can claim 130% of that figure (i.e. £130,000) from your taxable profits.
Applying 19% corporation tax to that £130,000 figure gives you a tax saving of £24,700
The table below provides a comparison of the Super Deduction with the previous system – as you can see, the tax saving is more than doubled in this example.Read more