Invest In A Brighter Future

Special Rate Assets - 50% First Year Allowance

Since the Covid-19 pandemic, existing low levels of business investment have fallen, with a reduction of 11.6% between Q3 2019 and Q3 2020. Much of the UK’s productivity gap with competitors is attributable to our historically low levels of business investment compared to our 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 business investment. As a result, these measures can promote economic growth and provide support in the journey to become greener society. The super-deduction will give companies a strong incentive to make additional investments, and to bring planned investments forward.

From 1 April 2021 until the end of March 2023, companies can claim the 50% first-year allowance for special rate assets including LED lighting and Solar PV Systems. This change makes the UK’s capital allowance regime more internationally competitive.

The Capital allowance 2021 will let customers who are looking to invest in either Solar PV or LED Lighting claim and lower their corporation tax bills through the special rate allowance as of April 2021.

What Is The New Special Rate Allowances Offer?

In Spring Budget 2021, the Uk government have announced the new special rate allowance opportunities in order to assist economic growth and encourage business investment. The scheme means that assets which qualify for a capital allowances at the lower rate of 6% such as solar panels, electrical and lighting systems will be able to claim a 50% first year allowance this will be on a limited time basis and allowance will end on the 31st of March 2023. The capital allowance could be significantly beneficial for businesses all over the UK who are eager to invest in led's but arent sure if the benefits add up. Well, now more than ever LED lighting is the perfect addition to your company allowing you to enjoy enhanced lighting with the bonus of saving whilst you are doing it.

What Are The Benefits My Business Could Receive?

Lighting Investments that meet the criteria could be eligible for a 50% first-year allowance.

For every £10,000 invested in lighting, a £5000 year- one tax deduction could be available compared to the normal £600 deduction that would be offered to you under normal circumstances.

Seems like a fair bit you could save right? When you add it all up this ammounts to an additonal cash tax saving of £836 in year one alone, aswell as a net preent value benefit of £316 over the life of the asset in full against taxable profits.

Does My Lighting Investment Qualify?

If you meet the following criteria you could be eligible to claim an allowance;

  • The invoice for your product, either rdirectly from us or indirectly from a contractor, is dated between 1 April 2021 and 31 March 2023.
  • Your are a company within the charge of UK Corportation Tax
  • Your purchase contract, either drectly with us or indirectly with a contractor, is signed on or after 3 March 2021
  • You are not a landlord, or if you are, the lighting units have not been installed in the demised area of a tenant's lease.
  • The lighting is a capital investment for the long - term benefit of your trade or property business.
  • You hold a freehold/ leasehold interest in the property at the time of installation
  • You are currently trading / carrying on a property business, or will start one between April 1 2021 and 31 March 2023.
  • The lighting system installed is either:

    1. New (i.e a lighting installation was not in the property previously) or an improvement / enhancement of the existing unit which could not be considered a like- for - like or modern - day equivelent ( because of the previous unit is still on the market ) or

    2. A like - for - like replacement or nearest modern day equivelent, where the cost incurred in a 12 - month period is more than 50% of the entire lighting system in the building in question.

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    How Can The Special Rate Allownace Benefit My Solar System?

    Whilst Solar Panels are designed to cut energy bills and improve your way of livng with the aim of creating a carbon neutral lifestyle desiged for ultimate substainability we understand you have to pay for the privellge. Having an allowance scheme in place could make solar signficantly more viable for companies across the UK.

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    How Do Know If Im Eligible?

    The conditions which must be met in order for expenditure on Special rate assets to qualify for the first-year capital allowance. The eligibility coniditons are:

    In order for expenditure to qualify for the 50% first-year allowance the following eligibility conditons must be met:

  • The expenditure is special rate expenditure
  • It is incurred on or after 1 April 2021 but before 1 April 2023
  • It is incurred by a company within the charge to Corporation Tax
  • Not unused and not second-hand
  • The expenditure is not within any of the eight general exclusions,
    which includes exclusions for expenditure on cars and on the provision of plant and machinery for leasing.
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