Take a look at the most recent investment incentives introduced by the government.
Several Super Deduction Allowances Announced
If you are planning to make investments for your company, now is a perfect time, as several super deduction allowances are in place. For new plant and machinery, the allowance is set at 130% of the cost and 50% of the purchase cost of certain building fixtures and fittings. These super deductions will expire on the 31st of March 2023, so be sure to take full advantage.
Annual Investment Allowance Will Also Be Reduced
Along with super deductions, there will also be additional changes. The annual investment allowance (AIA) cap, due to reduce from £1m to £200,000 on the 1st of April 2023, will now remain fixed permanently at £1m. This AIA can be claimed by any form of business and applies not only to brand-new equipment but also second-hand. In fact, around 99% of companies will be able to claim a full deduction for the cost of plant and machinery using AIA.
Changes To The Current R&D Schemes
For SMEs, the deduction rates available under the R&D schemes will be reduced, partly to accommodate the corporation tax rate changes coming into effect on the 1st of April 2023 but also due to the perceived widespread abuse of the schemes. Any businesses that use the SME scheme will see the allowable deduction reduced from 130% to 86% and the payable tax credit reduced from 14.5% to 10%.
Larger companies that use the R&D expenditure credit scheme will be able to deduct an increased credit of 20% instead of 13%.
The investment zones proposed by the previous administrator will go ahead in a limited number of areas. They will not attract tax reliefs such as reductions in business rates or employers’ NIC.