A new ‘super-deduction scheme’ which is in effect an extension of the Annual Investment Allowance (AIA) has been introduced.
This allows businesses to deduct the full value of qualifying assets from profits before tax. The full tax relief is received in the year assets are purchased rather than over several years, therefore reducing your tax liability.
This measure will provide significantly faster tax relief for qualifying investments up to £1,000,000 helping businesses to invest and grow.
For example under the new rules: If your taxable profits pre-investments are £200,000, and you invest £100,000 in qualifying new vehicles, plant or machinery, you will be entitled to claim in that year a capital allowance of £130,000, a saving of £112,000 compared to current rules.* The scheme works alongside a number of finance options including Hire Purchase.
The extension in AIA will apply to qualifying expenditure on vehicles, equipment, machinery and other assets a business needs from 1 April 2021 (dependent on a businesses chargeable period).
For more information on this allowance from HM Revenue & Customs, refer to their website: www.gov.uk or contact your Close Brothers representative who can discuss your individual requirements with you.