As you are probably aware a new ‘super deduction’ was announced at Budget 2021 for companies investing in qualifying expenditure from 1 April 2021 for a two-year period until March 2023.
Please click here for an overview which we included in our recent broadcast email.
The below table includes the types of capital expenditure this might include for a veterinary practice.
As an example, if the veterinary practice (limited company only) purchased a brand new Xray machine for £50,000 the tax deduction would be as follows:
| |
Pre 31 March 2021 |
1 April 2021-31 March 2023 |
| Cost of Xray |
50,000 |
50,000 |
| Increased deduction |
- |
15,000 |
| Total cost allowable for tax deduction |
50,000 |
65,000 |
| Tax deduction @19% |
9,500 |
12,350 |
The treatment of certain new capital expenditure is set out below:
- Fridge for medicines – 130% super deduction
- Computer systems – 130% super deduction
- Till system - 130% super deduction
- Non-moveable cabinets – Normal Annual Investment Allowance* deduction - 100% deduction
- Moveable cabinets - 130% super deduction
- Fixed shelving – Normal Annual Investment Allowance deduction – 100% deduction
- Freestanding shelving (i.e. moveable) - 130% super deduction
- Work tops – Normal Annual Investment Allowance deduction – 100% deduction
- Signage – 130% super deduction
- Office furniture – 130% super deduction
- Software – 130% super deduction
- Vans – 130% super deduction
If you are considering a capital purchase not on the above list, please do get in touch so we can guide you further.
*As a reminder, the Annual Investment Allowance threshold is as follows:
|
to 31 December 2021 |
From 1 January 2022 |
| Annual Investment allowance (AIA)** |
100% on first |
100% on first |
|
£1,000,000 |
£200,000 |
An AIA of £1million applies to investment made up until 31 December 2021. From 1 January 2022 the AIA will reduce to £200,000. For accounting periods which straddle 1 January 2022, transitional arrangements will apply and should be checked as to the maximum amount of AIA that can be claimed.
From 1 April 2021 there is also a 50% First Year Allowance available for Special Rate Pool items (e.g. integral features) which was previously not applicable, meaning more tax relief sooner for certain assets, if not already set against AIA.
Timing
If your year end is 31 March and you delay the expenditure until after 31 March 2021 then although you may get increased deduction of 30%, which for a company would be worth an additional tax deduction in cash terms of £2,850 for each £50k, tax relief would be delayed by a year. For further consideration on timing please click here.
If you have any questions regarding the timing of expenditure and/or whether it will qualify for the super deduction, please do not hesitate to contact one of the team.