*** Christmas Hours ***
Our office will close on Friday 16th December 2022 and re -open on 3rd January 2023.
The office hours will then temporarily change to:-
Tuesday – 9.30 – 4.30
Wednesday – 9.30 – 4.30
Thursday – 9.30 – 4.30
Friday – Closed
Please email or call if you are planning a visit in case we are working from home.
Many thanks
Time is running out to claim 130% allowances. The deadline is 31st March 2023
What is it:-
The super deduction allowance is only available to Limited Companies chargeable to corporation tax
The super deduction is a first year allowance available on expenditure by companies on plant and machinery. It has no limit and is available from 1st April 2021. It is for businesses who want to invest in assets for their business and allows companies to reduce corporation tax bills by reducing taxable net trading profits by 130% of the total cost of expenditure incurred. So for every £10K spent on assets, £13K can be deducted from the taxable profit before corporation tax is calculated.
The assets must be bought:-
Also the expenditure must be between:-
This means that second hand goods do not qualify.
CAPITAL ALLOWANCES
Permanent increase in AIA limit
The Annual Investment Allowance (AIA) is a capital allowance which provides immediate relief for qualifying expenditure up to the AIA limit. The limit will now remain at £1 million, rather than reverting to £200,000 from 1 April 2023.
As a result, you may wish to reassess your capital expenditure plans. Where cashflow is tight, it is no longer necessary to incur the expenditure before 31 March 2023 to benefit from the £1 million limit.
We can help you maximise relief for your capital expenditure.
Super-deduction and 50% first-year allowance for companies
Companies are able to benefit from two additional first-year allowances for qualifying expenditure incurred in the period from 1 April 2021 to 31 March 2023.
The first is a super-deduction available for most expenditure that would otherwise benefit from main rate writing down allowances at the rate of 18%, although cars are excluded. Where the expenditure qualifies for the super-deduction, the first-year allowance is given at the rate of 130% of the qualifying expenditure. A balancing charge may apply on the disposal of the asset.
Where available, the super-deduction is advantageous and will provide a better rate of relief than that given by the AIA.
The second temporary allowance is a 50% first-year allowance for qualifying expenditure that would otherwise qualify for a writing down allowance at the special rate of 6%. The first-year allowance is given at the rate of 50% of the qualifying expenditure. It is not available for expenditure on cars. As with the super-deduction, a balancing charge may apply.
Corporation tax reforms
The planned corporation tax reforms are going ahead. From 1 April 2023, the rate of corporation tax that you pay will depend on the amount of your taxable profits.
If you are a standalone company with profits of more than £250,000 you will pay corporation tax at a rate of 25% from 6 April 2023. A small profits rate of 19% applies where the profits of a standalone company are £50,000 or less. Where profits are between £50,000 and £250,000, the effective rate is between 19% and 25%. In this band, corporation tax is payable at the rate of 25% as reduced by marginal relief.
If your company has associated companies, the £50,000 and £250,000 limits are divided by the number of associated companies plus 1. The limits are also proportionately reduced where the accounting period is less than 12 months.
If your accounting period straddles 1 April 2023, you will need to apportion your profits and work out the corporation tax separately for the period before 1 April 2023 and the period on or after 1 April 2023.
Reduction in annual exempt amount
The capital gains tax annual exempt amount is the amount of net gains that can be realised each tax year before capital gains tax is payable.
The annual exempt amount is set at £12,300 for 2022/23. It is to fall to £6,000 for 2023/24 and to £3,000 for 2024/25.
Reduction in dividend allowance
The dividend tax rates were increased by 1.25% from 6 April 2022 and will remain at 8.75% where the dividends fall within the basic rate band, at 33.75% where the dividends fall within the higher rate band and at 39.35% where the dividends fall within the additional rate band.
Dividends sheltered by the dividend allowance are tax free. The dividend allowance is set at £2,000 for 2022/23. However, it is to fall to £1,000 for 2023/24 and to £500 for 2024/25.
Additional rate threshold to fall
The additional rate threshold is to fall from £150,000 to £124,140 from 6 April 2023. The personal allowance and basic rate band will remain unchanged, at respectively, £12,570 and £37,700, until 6 April 2028. The tax rates are also unchanged for 2023/24, remaining at 20%, 40% and 45%.
Read MoreAIA transitional limit
The annual investment allowance (AIA) transitional limit will remain at £1 million until 31 March 2023, providing immediate relief for qualifying capital expenditure.
Talk to us about your capital expenditure plans to ensure that you don’t miss out on valuable reliefs.
Super-deduction
If you are a company and you incur capital expenditure in the period from 1 April 2021 to 31 March 2023, you may be able to benefit from a super-deduction of 130% of the expenditure where the expenditure would otherwise qualify for main rate capital allowances at the rate of 18%, or a 50% first year allowance where the expenditure would otherwise qualify for special rate capital allowances at the rate of 6%.
BFMS help ensure that you optimise your capital allowance claims.
Extended carry back
If your business has been adversely affected by the Covid-19 pandemic resulting in a loss, you may be able to benefit from the extended carry-back provisions to generate a tax repayment.
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For capital gains tax purposes, individuals are allowed to realise net gains (after deducting any capital losses) of £12,300 for 2021/22 tax-free. Where capital disposals are on the cards, if the annual exempt amount remains available, consider making the disposal prior to 6 April 2022 to utilise the 2021/22 annual exempt amount, paving the way to realise gains free of capital gains tax in 2022/23.
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