Tax Relief Opportunities
100% Tax Relief for Sole Traders, Partnerships and Corporates
On the 15th March 2023 the Chancellor announced a set of incentives for growth. Keen to continue to support UK businesses when the COVID recovery Super-deduction tax relief ends at the end of the month, Jeremy Hunt laid out his new measures effective from 1st April 2023.
100% tax relief will be available on eligible purchases like JCBs, plant, equipment, and commercial vehicles – offset against taxable profits via either the Annual Investment Allowance or Full Expensing.
Annual Investment Allowance (AIA) – Up to £1 Million Tax Relief
£1 million tax relief opportunity under the Annual Investment Allowance remains in place. Effectively benefitting from tax relief of £1 in taxable profits for every £1 spent on qualifying expenditure. The incentive to invest accelerates the tax relief into the year they were purchased, compared to writing down allowances (WDA), which are normally applied over several years.
This allowance is available to sole traders, partnerships and limited companies alike on qualifying new and used assets. Note cars are not eligible.
Corporation Tax Full Expensing – Unlimited Tax Relief on 100% of your Investment
From 1 April 2023 until at least 31 March 2026, unlimited investments made by companies in qualifying new plant and machinery will qualify for a 100% first-year allowance for main rate assets. This means companies across the UK will be able to write off the full cost in the year of investment, known as full expensing.
Expenditure on plant or machinery for leasing (likely to include non-operated plant hirers) is excluded from first -year capital allowances and cars are not eligible. In any event, speak to your accountant or tax advisor for guidance if qualification for the relief is essential to your purchase decision.
Super-deduction 130% ends 31st March 2023.
This limited time offer of enhanced tax relief formed part of the Government COVID-19 recovery package and ends as planned this March – but all is not lost. Although this incentive offered the full cost of assets plus a further 30% is deductible against corporation tax in the year the assets are bought the Corporation Tax rate applicable was 19%. When the incentive changes over to the Full Expensing allowance (100%) it coincides with the Corporation Tax increase to 25% for companies with £250,000 profits or more, so for them the net benefit is the same.
Access to Tax Relief That’s Easy on Cash Flow.
You can claim the Annual Investment Allowance and Corporation Tax full expensing relief on qualifying assets placed on Hire Purchase just as if you had paid cash; enabling you to preserve working capital, choose payment terms to suit your business and save the tax –
If you would like a competitive Hire Purchase quotation on flexible payment terms matched to the needs of your business, please get in touch.
T.C. Harrison JCB is not a tax advisor or financial advisor; always seek advice from your accountant or finance director because every business’s circumstances are different. Businesses should not make investment decisions purely on a tax basis; there should be a compelling business case for the investment. UK business users only; terms apply.
T.C. Harrison JCB (Registered in England No: 01863311 Registered office: T. C. Harrison Group Limited, Milford House, Mill Street, Bakewell, Derbyshire, DE45 1HH) is authorised and regulated by the Financial Conduct Authority. T.C. Harrison is a credit broker and JCB Finance Ltd are its preferred supplier of Finance. JCB Finance Ltd (registered in England No:972265 and whose registered address is: The Mill, High Street, Rocester, Staffs, ST14 5JW) is authorised and regulated by the Financial Conduct Authority (Firm Reference Number: 708332). We receive a commission from JCB Finance