Vale & West Chartered Accountants Blog

Are you missing out on tax-free corporate investment allowances?

When it comes to running a business, you must keep up with the ever-changing industry you are a part of.

It is important to be aware of any allowances you are missing out on, so that your company can reap the benefits.

So, what support is on offer?

Capital Allowances

Capital allowances can lessen the amount of Corporation Tax you are required to pay.

The Annual Investment Allowance (AIA) allows you to deduct 100 per cent of any eligible plant or machinery costs from your firm’s profits.

This allowance is now permanently set at £1 million per annum.

It is important to note that Corporation Tax will rise to 25 per cent from 1 April 2023.

Businesses with profits above £50,000 will see the amount of Corporation Tax they pay rise as a result.

Those who have profits of £250,000 or more will be paying the top amount and those with profits between £50,000 and £250,000 will pay Corporation Tax at a tapered rate based on the marginal relief they receive.

Enhanced Capital Allowances

If your projects are eco-friendly, you can claim enhanced capital allowances.

This type of first-year allowance can only be claimed for new and unused machinery and equipment.

This can be claimed on top of the AIA and allows you to deduct the equipment’s full cost from your company’s profits.

Writing Down Allowances

If you’ve already claimed AIA on items worth a total of more than the AIA amount or the new asset does not qualify for AIA, you might be able to claim writing down allowances.

These tax allowances let you deduct a percentage of the value of an item from your profits each year.

SME R&D tax relief

If you have less than 500 members of staff, and a turnover of under 100 million euros, you may be eligible for R&D tax credits.

With this, you can subtract an additional 130 per cent of your qualifying costs from your annual profits.

Super deduction

From 1 April 2021 until 31 March 2023, businesses investing in qualifying new plant and machinery assets will be able to claim a 130 per cent super-deduction capital allowance.

As well as this, a 50 per cent first-year allowance for qualifying special rate assets is available.

What happens to unclaimed tax?

You can reclaim any missed capital allowances within 12 months from the end of the accounting period in which you acquired the costs.

However, it is always best to get a clear hold on any reliefs you may be eligible for.

For advice on related matters, contact our team today.

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