How could Business benefit and buy Chairs or Desks with the Super Deduction.
To encourage businesses to invest in new equipment and furniture the Government has introduced the 130% Super Deduction.
Basically businesses can apply a 130% tax deduction on qualifying purchases in year one. This means that if you were to spend £10,000 on, for example, new office furniture you can then reduce your taxable profits by £13,000 in the first year. This will give you a tax saving of £2,470 (19% corporation tax on £13,000).
SPEAK TO YOUR ACCOUNTANT for full details
See Government Website Here
ARE THERE ANY CONDITIONS ON USING THE SUPER DEDUCTION? Yes, there are conditions on using the Super Deduction. Firstly the purchases have to be made by a company or organisation that pays corporation tax.
- It is not available to private individuals or partnerships.
- Also to have any benefit you need to have made sufficient profit to set the deduction against.
- Any equipment or items purchased must be new and not second-hand, used or refurbished.
- There are certain items that excluded for example company cars although commercial vehicles such as lorries or vans are included.
- The purchase must be made or expenditure incurred from 1st April 2021 up to 31st March 2023.
- There are additional conditions that apply if you are financing the purchase using hire purchase or leasing.
- These additional conditions include: The company acquiring the asset via a qualifying finance agreement is also the one using the item. This is to ensure that the benefit of the super deduction goes to the business making the investment rather than the lender or leasing company. The finance agreement is one where the company obtaining the equipment eventually owns the equipment. This would obviously apply to a hire purchase agreement and potentially a finance lease where there is a clear option to purchase included in the contract.
- It would seem that it would not apply to a contract hire agreement as the equipment remains in the ownership of the leasing company and there is no explicit option to purchase.
- Any information provided in this article is only our interpretation of the rules around the application of the super deduction announced in the March 2021 budget. TMO strongly recommend that you obtain advice from your accountant or tax advisor for your own specific circumstances.
