Annual Investments Allowance (AIA)
“The AIA limit is £1 Million. This is a huge opportunity to reduce tax liabilities.”
Following the announcement in the Autumn Statement on Thursday 17th November 2022, the limit for AIA was made permanent at £1 million. Previously, the limit was £200,000. This recent increase makes this the highest-ever level of relief.
The Government wants to encourage growth and investment within businesses. Annual Investment Allowance is designed to enable businesses to reduce their tax liabilities for qualifying expenditures, on plant and machinery, and embedded fixtures and fittings.
Discover more on Annual Investment Allowance
Super-deduction
“Super-deduction will be ending on 31 March 2023. Now is the time to benefit from this before it’s too late!”
Super-deduction is an allowance available on commercial property, or improvements purchased new between 1 April 2021 to 31 March 2023. It provides the buyer with the opportunity to claim qualifying asset purchases at 130%.
Please note that several criteria must be met for this allowance to be applied correctly:
- Super-deduction is claimable on an asset where the contract to purchase the asset was signed on or after 3 March 2021.
- The allowance only applies to general pool items.
- The allowance only applies to items purchased new (i.e., it is not available on items purchased second-hand).
It can be a complex allowance to utilise but our team has the expertise to handle all aspects of your claim. We have written an article showing how super-deduction can still be claimed after 31 March 2023, subject to tax years and dates of spend.
Learn more about super-deduction
Research and Development Allowances (RDA)
“There is no limit to how much RDA can be claimed.”
Research and Development (R&D) reliefs are designed to support companies that work to innovate new processes or products within their market. It covers a range of projects in science and technology, and it can even be claimed on unsuccessful projects. There is a possibility of claiming corporation tax relief if your project meets HMRC’s definition of R&D.
The project must relate to your company’s trade, either an existing one or one that you intend to start up based on the results of the R&D. In addition, the project may research or develop a new process, product, or service, or improve an existing one.
To get Research & Development relief you need to explain how a project:
- looked for an advance in science and technology
- had to overcome uncertainty
- tried to overcome this uncertainty
- could not be easily worked out by a professional in the field
If your company is an SME, Research & Development relief allows you to: deduct an extra 130% of your qualifying costs from the total profit, as well as the normal 100% deduction, to make a total 230% deduction. If the company is loss-making, you may be able to claim a tax credit, worth up to 14.5% of the surrenderable loss.
We work closely with you to fully understand your market, company, and processes so that we can claim the maximum relief on the cost of your innovations.
Learn more about Research and Development Allowances
Structures and Buildings Allowance (SBA)
"If you have spent capital growing and expanding your commercial property, then SBA may be for you."
SBA is claimable on items within the commercial property. This could include walls, ceilings floors, structures, etc upon which no other allowances are claimable. In simplified terms, if a building was constructed for £1m and capital allowances were claimable of £250,000, that would leave £750,000 potentially claimable as Structures and Buildings Allowance.
The claim was initially 2% per annum until 1 April 2020 when the rate increased to 3%. It is claimed on a straight-line basis, so at 3% the claim would be fully utilised in 33 and one-third years.
Please note that, as with other allowances, there are certain criteria to meet:
- SBA is only available on new build or improvement works (i.e., not second-hand)
- It is available from 29th October 2018. Contracts signed before this date, even if work had not commenced, are excluded.
- The claim must start from whichever is later: the date when you started using the structure for a qualifying activity OR the date that you’re due to pay for the structure or construction
- There are also a few exclusions, the cost of land and planning fees for example.
There are many elements to consider when calculating the SBA portion of your claim that we would be happy to discuss with you.
Learn more about Structures and Buildings Allowance
We hope our January 2023 Deadline Toolkit has proved useful. You can lean on us for further support to potentially reduce your tax liabilities...
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