Super Deduction: Why is now a good time to invest in a new spray booth?

If you are planning to invest in a spray booth (or other capital equipment), you could make a tax saving of up to 130% (in the first year of purchase) if you buy the equipment before the 31^st of March 2023.

This tax incentive is among the several temporary capital allowance measures introduced by the UK Government after the pandemic to stimulate business investment. However, the super deduction scheme offers businesses investing in qualifying equipment a much higher tax deduction (130%) in the first tax year of purchase.

What are the Qualifying Criteria?

The scheme is available for:

• Corporation tax-paying companies (and not individuals, partnerships or LLPs)
• Expenditure under contracts that started from 3 March 2021
• Projects where the expenditure is incurred between 1 April 2021 and 31 March 2023

The Details

Super Deduction allows corporation-tax paying companies to cut their tax bill by 25p for every £1 they invest in capital goods for their business.

Unlike other capital allowances such as the Annual Investment Allowance (AIA), there is no upper limit on how much you can invest to qualify for the scheme. The deductions are, however, not applicable for second-hand equipment or plant and machinery for leasing.

The scheme is available either as a:

• A 130% first-year allowance on spray booths and most new plant and machinery that would otherwise only qualify for an 18% main pool annual relief

OR

• A 50% first-year allowance on most new special rate assets that would otherwise qualify for a 6 per cent annual relief.

Depending on other qualifying criteria, Masterflo’s spray booths could also be eligible for this generous tax relief scheme, provided your investment is made before the 31^st of March 2023. Please see the Gov.UK website for more details.