130% SUPER-TAX DEDUCTION

The Government's Super-Tax Deduction scheme is coming to a close at the end of March, making this the last chance to capitalise on reducing your corporation tax bill. You may already be aware of the scheme but when speaking to some recent customers of ours, they were unaware that such a scheme was in place and that they could be reducing their upcoming tax bill.

What is the Super-Tax Deduction Scheme?

Introduced in April 2021 when the last lockdown was ending, the scheme is targeted at "firms increasing their investment into productivity enhancing machinery assets". This includes brand new vans, and if they're electric the charging points as well.

The scheme allows businesses to 'reduce' their declared profit for the year by 130% of the amount spent on qualifying investment assets, thus reducing the amount of corporation tax paid. The scheme is ending on the 31st March 2023, which means you have until this date to purchase any qualifying equipment and vehicles.

While there are several qualifying rules around what does and does not count as an appropriate asset, the government has provided an example to help break down the impact it will have.

Example:

• ?A company spends ￡1m on qualifying investments and decides to claim the super-deduction.
• Spending ￡1m on investments mean the company can deduct ￡1.3m in computing their taxable profits (130% of their qualifying expenditure)
• Deducting ￡1.3m from their profits will save the company 19% of that - or ￡247,000 - on its corporation tax bill.

What does this mean for you?

The obvious benefit is that your corporation tax bill is reduced in accordance to how much you spend, so the more your expenditure on company investment, the lower your corporation tax bill. This is of course limited by your liquidity during the year, only being able to spend what you have available to you. But, by investing in new and more efficient vehicles now, you save overall due to the reduced tax bill.?

It is worth noting that the Super-Tax deduction only applies to brand new vans purchased outright, not through lease agreements. There are smaller tax deductible options for second hand vehicles, we recommend reading through the full legislation as listed on the .gov website. The link to which can be found below along with supplementary information on the legislation.

So if you're looking for a new van, the best time to get one is right now,?before the 31st March. After that you won't be able to deduct its value from your recorded profits for the year. That means all required paper work and the transaction itself must be completed before the deadline.

If you wish to capitalise on this scheme, our sales team will be more than happy to help to make sure you get your required vehicle before the deadline.?Enquire today to discuss your options.