FINANCE
Anthony Davies, Tax Partner at MHA Carpenter Box, discusses the tax relief available to help businesses get their office space ready for the ‘new normal’.
BACK TO THE OFFICE
there is help available! WHAT IS PLANT AND MACHINERY?
With the rapid progression of the UK’s COVID vaccination programme and reduction in lockdown restrictions, it is anticipated that many businesses could see an increase in the number of employees attending office premises over the next six to nine months.
Despite the industrial term, plant and machinery generally refers to the equipment used for carrying on a business (‘tools of the trade’). While it can include machines, it can also include any number of office items including fire alarms, security systems, carpets, computers and refrigeration to name just a few.
SUPER-DEDUCTIONS
The preparation for the return to the workplace will no doubt have a financial impact on many businesses as they upgrade equipment and make their offices a safer and more flexible working environment. From April 1st 2021 until March 31st 2023, there are two new reliefs available to companies that qualify with expenditure on plant and machinery assets. The two reliefs are: n A 130% super-deduction capital allowance qualifying plant and machinery n A 50% first-year allowance (FYA) for special rate assets. This means that companies will be able to save up to 25p in tax for every £1 invested.
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WHAT CAN BE CLAIMED?
The 130% super-deduction is for assets that would normally qualify in the main pool for capital allowances with a writing down allowance (WDA) of 18%. This includes plant, machinery, furniture, etc. This means if a company spends £100,000 on qualifying office equipment, the company can claim a deduction of £130,000 against taxable profits. The 50% FYA is for assets that normally qualify in the special rate pool with a WDA of 6%. These are integral features such as air-conditioning, lifts and water heating systems.
In general, you can claim capital allowances when you buy qualifying assets. In the current climate, all types of business are evaluating how they can optimise their workspace to provide more flexibility and provide a more agile working environment. The items must be new or unused.
❛❛ This means that
companies will be able to save up to 25p in tax for every £1 invested ❜❜
