In last week’s Budget, Chancellor Rishi Sunak announced the introduction of a ‘Super Deduction’ of 130% providing enhanced tax relief on qualifying capital expenditure.
The enhanced rate is available from 1 April 2021 until 31 March 2023 for businesses investing in qualifying plant & machinery. In addition, a 50% first year allowance is available for qualifying special rate assets including long life assets such as electrical and cold-water systems.
Comments Julia Gallagher, Tax Partner at Curo: “We welcome this move by the Chancellor to encourage investment in businesses and reinvigorate the economy. With the current financial year ending, where commercially feasible, we urge businesses to consider timing investment so it falls in the qualifying period.”
The super deduction will allow businesses to cut their tax bills by 25p for every £1 spent on qualifying assets although caution is advised when claiming, as Julia explains: “Whilst this relief seems generous, businesses should exercise caution when submitting capital allowance claims. HMRC will devote more resources to seek out fraudulent claims where amounts have been reclassified and manipulated in to qualify for the super deduction.”
Clamping down on Covid-19 claims fraud
Also announced in last week’s Budget were plans for a new £100m Taxpayer Protection Taskforce investing in over 1,200 HMRC staff to tackle Covid-19 support fraud. Businesses and individuals have received billions of pounds in financial support to help them through the pandemic and with support ending later this year, the HMRC Taskforce will divert resources into clawing back money claimed illegally.
Comments Julia “This is another welcome move by the Chancellor and we urge businesses to double check any claims have been made within the rules. As we have seen in recent tax amnesties, it is almost always better to show transparency and come clean first before HMRC discovers any wrong doing.”
If you would like to discuss the Budget and what it means for you, please get in touch with [email protected] or call 01527 558539. Curo offers a full suite of tax services for businesses to help optimise the tax position.