Under the super tax deductions, for two years from 1 April 2021 any investments your business makes in main rate plant and machinery will qualify for a 130% capital allowance deduction.
The super tax deductions allowance is the most attractive tax incentive for business investment ever offered by a British government. Your company can claim back up to 25p for every pound you invest in ‘qualifying’ machinery and equipment for two years from 1 April 2021.
From (then) Chancellor and current PM Rishi Sunak’s perspective, it’s a “direct way to help businesses invest” and “drive growth in the economy”.
One of the areas where this tax break can be particularly beneficial is in the purchase of air compressors. Air compressors are a vital piece of equipment for many businesses, and the super deduction can provide a significant financial incentive for companies to invest in new and more efficient models.
Overall, the super tax deductions can provide many benefits for businesses that invest in air compressors. By allowing companies to claim 130% of the cost of a qualifying investment, the super deduction can help businesses to save money on their taxes, improve their energy efficiency, and increase their productivity.
It should be noted that the super tax deductions were introduced as part of the UK budget 2021 and will be available for companies until the end of March 2023 and eligible for companies for both expenditure on new and second-hand assets. Also, it's important for businesses to consult with their accountant or financial advisor to ensure that they are taking full advantage of the super deduction and other tax incentives that may be available to them.
In this blog post, we'll take a closer look at the benefits of the super tax deduction for businesses that invest in air compressors.
Save money on taxes
The super tax deduction allows businesses to claim 130% of the cost of a qualifying investment as a deduction from their taxable profits. This can significantly reduce the amount of tax a business has to pay, freeing up cash that can be used to invest in other areas of the business.
Improve energy efficiency
Many modern air compressors are designed to be more energy efficient than older models. The super tax deduction can make it more affordable for businesses to invest in these types of compressors, which can help to reduce energy costs.
Increase productivity
Newer air compressors are often more reliable and efficient than older models. This can help to reduce downtime and increase productivity, which is especially important for businesses that rely heavily on air compressors for their operations.
Is my business eligible for super tax deductions?
Your business is eligible if you spend money on any of the assets listed below between April 1 2021 and March 31 2023.
What does the government mean by ‘qualifying’ plant and machinery?
The range can be anything from computer equipment to a new production line.
- Compressors
- Dryers and gas generators
- Vacuum pumps
- Low pressure equipment
There are exclusions – structures and buildings and equipment that landlords install. Care will need to be taken on leased plant and equipment which may too be subject to restrictions.
Super Tax Deductions: Working Example
Example 1
- A company incurring £1m of qualifying expenditure decides to claim the super deduction.
- Spending £1m on qualifying investments will mean the company can deduct £1.3m (130% of the
initial investment) in computing its taxable profits. - Deducting £1.3m from taxable profits will save the company up to 19% of that – or £247,000 – on
its corporation tax bill.
Example 2
Previous System
With Super Tax Deductions
Conclusion:
Overall, super tax deductions can provide many benefits for businesses that invest in air compressors brands such as ABAC, CompAir, Hydrovane and many more. By allowing companies to claim 130% of the cost of a qualifying investment, the super deduction can help businesses to save money on their taxes, improve their energy efficiency, and increase their productivity.
Simple and Easy.
How do I take advantage of super tax deductions?
Speak to us today and we can work through your options fast before the tax break ends in March 2023.