A new survey by BPI Auctions, which specialises in the sale of pre-owned assets, claimed that only one in eight (12%) of those questioned said they knew of the Government’s super-deduction capital allowance on plant and machinery investments. This rather measly percentage is somewhat troubling, as it means a great deal of you are likely missing out on a potentially large tax break. The Government introduced the incentive in April 2021 to stimulate investments in machinery and improve economic growth, which had inevitably deteriorated during the Covid-19 pandemic. It runs until 31 March 2023, providing you with an unmissable opportunity to save money. In short, you can cut your tax bill by up to 25p for every £1 you invest! Unfortunately, much of the UK’s productivity gap is attributable to our historically low levels of business investment compared with our international peers. Weak business investment has played a significant role in the slowdown of productivity growth since 2008. Making capital allowances more generous works to stimulate investment. As a result, measures such as the super-deduction capital allowance can promote economic growth, but only if word spreads! To set out the potential savings available, imagine you invest £100,000 in a new CNC machine tool and decide to claim the super deduction. Spending £100,000 on qualifying investments will mean you can deduct £130,000 (130% of the initial investment) when calculating your taxable profits. Deducting £130,000 from taxable profits will save you up to 19% of that, or £24,700 on your corporation tax bill. As the ancient proverb says: better than a poke in the eye! So why not cash in and make that all-important investment you’ve had on ice for the past couple of years? The clock is counting down! Who doesn’t love a deal - Get spending! Laura Crawford Editorial Director Super deduction: How much can you really save?
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