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Helping your clients make the most of Super Deduction

SMEs looking to invest in new assets to grow their businesses have been provided an extra helping hand by the Government this year. Super Deduction is a tax saving that your clients can leverage against the investment made on certain assets acquired to grow the business.

This saving only applies to brand new assets purchased between April 2021 and March 2023 and can be used alongside Hire Purchase where the original contract includes client ownership of the asset at the end of term.

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Assets eligible for 130% Corporate Tax Deduction:

    • Cranes and diggers and other construction equipment
    • Machinery and Tooling
    • Commercial vehicles such as tractors lorries and vans (not cars)
    • Computer Equipment and software
    • Office Furniture

Assets eligible for the 50% First Year Capital Allowance:

    • Electrical Lighting Systems.
    • Hot and cold water systems
    • Air Conditioning systems
    • Lifts
    • Solar Shading

How Asset Finance and Super Deduction work together

  • Your client is looking to buy new machinery worth £2m. The business is keen to use Asset Finance to help maintain cashflow and wants to take advantage of Super Deduction too.
  • The client acquires the machinery on a Hire Purchase agreement and takes up the client ownership option before March 2023.
  • The business can then offset a 130% capital allowance or £2.6m against their taxable profits.
  • Applying the current corporation tax rate of 19%, your client saves £494k in tax on the new machinery whilst still benefiting from the flexibility of Asset Finance.

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Billboard - How it works

Points to consider:

  • The tax deduction can only be levied against certain assets, excluding company cars, second hand machinery, leased out equipment or buildings and structures (excluding integral features).
  • The assets must be purchased and paid for between April 2021 and March 2023.
  • Super Deduction applies to Hire Purchase where the original contract includes client ownership of the asset at the end of term. Leases are not subject to Super Deduction.
  • Tax charges may apply if your client disposes of the asset before the end of the Super Deduction period.

 

Advantages of using Shawbrook’s Asset Finance facilities with Super Deduction

  • Hire Purchases enables access to assets without a large upfront outlay, maintaining cashflow and still allowing for the purchase of the assets at the end of the contract.
  • Super Deduction delivers a substantial tax saving, which allows for further investment in the business.
  • Our team has good asset and industry knowledge and can make onsite client visits to discuss more complex transactions.
  • With short lines of reporting, our team can structure proposals and provide swift decisions.

 

Get in touch

If your client is considering a new asset and wants to know if this qualifies for Super Deduction, contact your Business Development Manager or email partnerproposals@shawbrook.co.uk

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