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Invest In A Brighter Future

Super-Deduction - Capital 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 counter business cycles. The super-deduction will give companies a strong incentive to make additional investments, and to bring planned investments forward.

For expenditure incurred from 1 April 2021 until the end of March 2023, companies can claim 130% capital allowances on qualifying plant and machinery investments. Under the super-deduction, for every pound a company invests, their taxes are cut by up to 25p. This change makes the UK’s capital allowance regime more internationally competitive, lifting the net present value of our plant and machinery allowances from 30th in the OECD to 1st.

The Super deduction 2021 will allow customers who are looking to invest in either Solar PV, Lighting or EV charging to claim and lower their corporation tax bills through either of the two capital allowances available as of April 2021.

What Is The New Capital Allowances Offer?

In Spring Budget 2021, the Uk government have announced two new capital allowance opportunities in order to assist economic growth and encourage business investment. The scheme means that companies who are investing in plant and machinery such as lighting systems may qualify for a limited time tax-saving which will end on the 31st of March 2023. The tax deduction 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 Businesses Could Recieve?

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 eligable 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.

    To find out more information go to https://www.gov.uk/guidance/super-deduction

    How Can Super Deduction 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 a deduction scheme in place could make solar signficantly more viable for companies across the UK.

    Click Here For Fact Sheet

    How Do Know If Im Eligable?

    The conditions which must be met in order for expenditure on plant or machinery to qualify for the super-deduction, which is a first-year allowance. The eligability coniditons are:

  • The expenditure 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
  • The plant or machinery is unused and not second-hand
  • The expenditure is not within any of the eight general exclusions,
    which include exclusions for expenditure on cars and on the provision of plant and machinery for leasing
  • It is not special rate expenditure
  • The plant or machinery is not for use wholly or partly for the purposes of a ring fence trade, which means a trade in respect of which tax is chargeable

  • In order for expenditure on plant or machinery to qualify for the 50% first-year allowance rhe following eligability 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
  • The plant or machinery is 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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