Invest in new technology to maximise your capital expenditure

Following the Chancellor's budget announcement, there is some welcome news for companies looking to make significant capital investment over the next two years with the introduction of a new super-deduction of 130% for qualifying capital expenditure. Currently, a company spending £10m would achieve tax relief of £2.6m in the year of expenditure, whereas they would achieve tax relief on £13m under the new rules.

This introduction of the super-deduction provides a real focus designed to stimulate business investment.

How does the new super-deduction work?

• The new measure is only temporarily being introduced for two years for expenditure from 1 April 2021 to 31 March 2023.
• This will allow a 130% deduction for investments which would normally qualify for 18% plant and machinery writing down allowances.
• The new rules also allow for a first year allowance of 50% on special rate pool expenditure (which normally only attracts 6% writing down allowances).

This is therefore a significant increase and acceleration of tax relief for many companies that would currently achieve 100% tax relief on the first £1m of spend. This could be particularly beneficial for those companies benefitting from an extended loss carry-back period and generate significant corporation tax refunds.

There will be a number of exclusions including contracts entered into before 3 March 2021 even if expenditure is incurred after 1 April 2021.

It's worth noting that the new super-deduction is only available to companies within the charge to corporation tax. Unincorporated businesses cannot benefit under this new rule and will continue to be able to claim the capital allowances at 100% of up to £1m under the annual investment allowance.

So, if you’re looking for a new printing solution, and in a position to take advantage of the super-deduction, get in touch to see how we can help.