Super-deduction allowance announced by the government in their 2021 Spring Budget comes to an end for claims on 31 March 2023.

Kayleigh Wilson, Tax Manager at Stephenson Smart, highlights that if you are a company that is looking to purchase new plant and machinery you may want to take advantage of this allowance before it ends.

What is super-deduction allowance?

Super-deduction works alongside the Annual Investment Allowance and gives 130 per cent deduction against the purchase of new plant and machinery.  However, it is only applicable to companies and for the purchase of new equipment.

Unlike the Annual Investment Allowance, there is no upper expenditure limit on super-deduction.

Example:

Purchasing a new tractor for 100,000 pounds.

Annual Investment Allowance – 100 per cent deduction = 100,000 pounds.

Corporation Tax at 19 per cent = tax saving of 19,000 pounds

Super-deduction – 130 per cent deduction = 130,000 pounds

Corporation Tax at 19 per cent = tax saving 24,700 pounds

As illustrated above, under the temporary super-deduction your company could gain an additional tax saving of 5,700 pounds.

What is Annual Investment Allowance?

Annual Investment Allowance gives 100 per cent deduction against business profits for the purchase of qualifying plant and machinery.

The current expenditure limit is 1 million pounds. It was announced in the 2022 Autumn Statement that this would remain at this level indefinitely.

Any expenditure in excess of this limit goes into a Main Pool or Special Rate pool for tax purposes and attract Capital Allowances at either 18 per cent or 6 per cent per annum.

There is also a 50 per cent first-year allowance for assets that would ordinarily qualify for the Special Rate Pool. However, if you have any remaining Annual Investment Allowance to use you should utilise that first to get 100 per cent deduction rather than 50 per cent deduction.

Do vehicles qualify for super-deduction?

Commercial vehicles such as lorries and vans do but cars do not. However, electric cars still qualify for the 100 per cent First Year Allowances.

Planning and timing are key to making the most of super-deduction and the Annual Investment Allowance. At Stephenson Smart we can help you get this right, please get in touch if we can support you with this.

Chris Goad, partner Stephenson Smart Chartered Accountants and Business Advisors offers some business start up advice.

Business Start Up Advice

Longer days and the promise of Spring bring with them a feeling of new beginnings.  This is a fitting time to think about setting up and running a business.

You may have a great idea that you are considering turning into a business but feel concerned about your lack of knowledge over what is needed and how it can be afforded.

Our advice is to always start with a business plan. It’s essential in guiding you in establishing and growing your venture and it can be a good way of planning targets and goals and looking at how much investment you are going to require.

Business Start Up Finance

You can look at two types of business finance – debt or equity.

Debt essentially means you borrow the money to set up a business in the form of a loan, whereas equity relates to selling an ownership interest in your business. This sort of sale takes many forms, such as the admitting of a partner.

A grant is also achievable. There are many on the market that you can apply for depending on what your business is and how big it is.

Type of Business Start Up

One of the most important aspects of setting up a business is deciding which type is right for you.

It might be that you wish to become a sole trader, limited company, company limited by guarantee or a limited liability partnership.

The type you choose will be dependent on a number of factors. Your tax position needs to be considered alongside the nature of the business you wish to run.

Compliance

It is important to consider how the business complies with tax, legislation and insurance requirements, which are imposed by various authorities, as well as understand how to keep the accounting records in order and make sure all self-assessment returns are completed on time.

At Stephenson Smart we support many clients who have independent and small businesses.

“Chris has been brilliant. I can literally send him a text with a quick question, and he is always so helpful.
With each start-up I have worked on Chris has guided me through the process and helped me with the business model. He’s also been so supportive throughout Covid and the different claims available to me.
I haven’t had the need to worry about anything because I know Chris is always at the end of the phone with an answer.”

Sean Brown, Owner, Cambridgeshire Hair and Beauty

We guide our clients through the appropriate registrations, cash flow forecasts and provided performance updates, and pride ourselves on our personal approach to nurture exciting and new ventures in a cost-effective way.

Our dedicated business start-up team are always happy to help, so get in touch.

Related pages: Business Start Ups

Profile: Chris Goad BFP FCA

Advisory fuel rates company car – an overview by Partner, Chris Goad:

New company car advisory fuel rates have been published and took effect from 1 September 2022.

The guidance states: ‘you can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.

The advisory fuel rates for journeys undertaken on or after 1 December 2022 are:

HMRC guidance states that the rates only apply when you either:

• reimburse employees for business travel in their company cars
• require employees to repay the cost of fuel used for private travel.

You must not use these rates in any other circumstances.

The Advisory Electricity Rate for fully electric cars is 8p per mile. Electricity is not a fuel for car fuel benefit purposes.

If you would like to discuss your company car policy, please contact us.

Martyn Benstead, Partner at Stephenson Smart Chartered Accountants and Business Advisors explains why now, more than ever, employing an accountant is important:

Financially, as well as politically, these are turbulent times.

Replacements in Prime Minister and Chancellor of the Exchequer are coming thick and fast and with these changes, volatility in the financial markets and economic climate inevitably follow.

Why employ an accountant at times likes these?

Good accountants relish change as it enables them to advise clients to take advantage of tax reliefs and of opportunities to maximise wealth.

Interest rates, tax rates and the markets are all changing constantly and it is hard to follow and understand what to do for the best with our finances and how to plan for the future.

Employing an accountant to your team at times like these is crucial and at Stephenson Smart, we’re available to help.

“Martyn was extremely helpful and clear and went above and beyond in trying to resolve the issues we had – even though it was our first meeting with him. We definitely got the sense that he cared about his work and clients and would do all he could to help. We had a very positive experience and would highly recommend Martyn and Stephenson Smart.”

Key areas that may affect you:

Property

If you are thinking about selling a residential property, you may need to be aware of the requirement to submit a Capital Gains Tax (CGT) Return and pay the tax due online within 60 days of completion. We can calculate the likely CGT to assist you in making an informed decision over whether to sell or rent your property.

Depending on the asset, you may be able to reduce any tax you pay by claiming reliefs.

As well as CGT, another factor needing consideration over whether to sell would be your inheritance tax position. Some assets would be subject to inheritance tax if left to beneficiaries in your estate at your death. Careful planning can assist in minimising the impact of this.

Business

There have been a raft of changes in the rates and thresholds in Income Tax, Corporation Tax, National Insurance and Dividend Tax.

It’s more important than ever to consider your business structure – whether you’re operating as a sole trader, partnership or limited company, it may no longer be the best for your circumstances.

Please contact us if you need a fresh look at how you structure your business.

Embarking on a new business start up is both an exciting and a challenging task, which carries with it an element of risk. Key decisions need to be made, and there are many factors to consider.  Partner, Chris Goad, highlights some of the key areas.

Business Plan

A business plan is an essential document that will guide you in establishing and growing your new venture; helping you focus your thoughts, providing you with targets and goals as well as giving you an indication of your cash requirements.

Finance

Business financing can take two forms: debt or equity. Debt means borrowing money. Loans may come from family, friends, banks, other financial institutions, or professional investors. Equity relates to selling an ownership interest in your business. Such a sale can take many forms, such as the admitting of a partner or, if you are in a company, issuing of additional shares to investors.

Getting a grant is also an option. There are many different small business and start-up grants available depending on where your business is based, how large it is and what you do.

Taxes, legalities, and insurance

A significant task for a new business owner is ensuring that the business complies with the extensive tax, legislation and insurance requirements that are imposed by various authorities. To avoid problems, penalties and – in some cases – legal action, it is important to understand your obligations.

“Chris has been brilliant. I can literally send him a text with a quick question, and he is always so helpful. With each start-up I have worked on Chris has guided me through the process and helped me with the business model. I haven’t had the need to worry about anything because I know Chris is always at the end of the phone with an answer.”

Sean Brown, owner, Cambridgeshire Hair and Beauty.

Stephenson Smart are specialist business start-up advisors. We can guide you through the decision-making processes, help you make the appropriate registrations, assist with cash flow forecasts and offer regular updates to enable you to monitor the performance of your business. Please get in touch if we can support you on your new business start-up journey.

Related articles: Stephenson Smart helps new business start up flourish