Signmaster Super Deduction 2023
Signmaster Super Deduction 2023 blog explains how you can benefit when purchasing a new machine.
Maximise your tax savings with a new machine purchase
Benefit from the 130% super-deduction before time runs out
In the 2021 budget the UK government introduced a tax deduction aimed at helping struggling companies. This super-deduction allows qualifying capital expenditure to gain extra tax relief, but it only runs until 31 March 2023.
There are a few criteria to be met in order to qualify. The most important ones are;
– Only limited companies are entitled to claim the allowance, sole traders and partnerships do not qualify.
– The expenditure must be on ‘qualifying plant and machinery’.
– The assets purchased must be new – not second hand.
All of our printers, plotters, laminators, applicators and cutters would be eligible for relief under the scheme so if you’ve been thinking about purchasing a new machine now is the time.
Under the current corporation tax rates and rules you can recover almost 25% of the cost of the new machine via a reduction in your tax charge as illustrated below;
Current offer price (ex VAT) £20,000 £10,000
Allowable deduction against profits £26,000 £13,000
Corporation tax saving at 19% £4,940 £2,470
Effective cost after tax £15,060 £7,530
The surge in fuel prices and economic downturn we have experienced in recent months has put significant strain on many businesses. However, even for those in a loss-making position for the current year there are advantages to be gained. The tax loss can be increased by the super-deduction giving further options;
1. Use the loss to reduce prior year profits and get a tax rebate straight away.
2. Carry the loss forward to reduce the tax charge in future years.
The main rate of corporation tax has been 19% for several years now but is due to increase to 25% from 1 April 2023 (with the small company rate staying at 19%). This means that option 2 could lead to an even bigger tax saving – more than 34% of the cost of the new machine in the right circumstances.
The key is timing. The super-deduction only runs for a few more weeks and to benefit from the savings you need to have your new machine installed by 31 March. If cashflow is an issue we work with selected finance partners who can discuss various options with you.
I hope you found ‘Signmaster Super Deduction’ Blog helpful!
Written by: Jonathan Humphreys