Loading and unloading equipment specialist Thorworld Industries is hailing the announcement of a new capital allowance scheme in the UK Government’s Spring Budget, which seeks to replace the previous ‘Super Deduction’ scheme which was due to end in March 2023.
The measures announced in the Budget offer a range of tax benefits to businesses investing in ‘main rate’ plant or machinery assets, on or after 1 April 2023 but before 1 April 2026.
The biggest savings can be made under full expensing, a 100% first-year allowance, which allows companies to claim a deduction from taxable profits that is equal to 100% of their qualifying expenditure in the year that expenditure is incurred. Under full expensing, this means that for every pound a company invests, their taxes are cut by up to 25p, and there is no limit on the value of the plant or machinery being invested in.
As full expensing is available to companies subject to Corporation Tax only, unincorporated businesses cannot claim. However, such businesses are entitled to claim the Annual Investment Allowance (AIA), which offers the same benefits as full expensing for investments up to £1 million per year.
Qualifying plant and equipment must be new and unused, and is defined as any tangible capital assets used in the course of a business, exempting land or buildings. This means, for example, that forklift trucks, shelving and loading docks and ramps will all qualify.
Thorworld had previously advised businesses to take advantage of the Super Deduction Scheme, which ended in March 2023 and is effectively replaced by the new measures.
“Anything that the Government can do to alleviate the tax burden on businesses who wish to invest in capital goods, has to be a good thing – and we urge people to take advantage of these new measures,” said Brendan Wilson, Financial Director at Thorworld Industries.
“In these straitened times, it’s more important than ever that businesses can continue to optimise their loading and unloading operations, in order to avoid supply chain bottlenecks.
“So the fact that every pound a company invests in logistics equipment can be deducted in full and immediately from taxable profits, will be invaluable.”