Trying to make a convincing case to your team to go ahead with capex? This scheme could be your answer! the Corporate Tax super deduction scheme that was launched by the Government recently. It applies to office furniture so is applicable if you are wanting to revamp your organisations internal recycling bins.
Businesses are looking at ways their staff can safely return to the office and purchasing furniture such as recycling bins or re-fitting your office could be in your planning. The super deduction which was announced in the Government’s budget for 2021 could help with the cost and be a factor in your planning.
What are capital allowances and how can this help your business?
A capital allowance is an expenditure a UK business may claim against its taxable profit. Capital allowances could be claimed on some assets purchased for use within the business. This covers equipment and expenses for building renovations, which are known as plants and machinery. This includes the purchase of office chairs and desks, office bookshelves, waste and recycling bins, office TVs and so on. All purchases must be on new and unused plant and machinery to qualify.
What is the ‘super deduction’?
The super deduction scheme was introduced on 3rd March 2021 to encourage UK businesses to invest in plant, machinery and equipment. It applies to assets purchased between 1st April 2021 until 31st March 2023. Only businesses subject to corporation tax can claim this relief. Therefore, sole traders and partnerships are not eligible.
It was announced that for every £1 a company invests on capital allowances, their taxes will be cut by up to 25p. This means that expenditure incurred between 1st April 2021 – 31st March 2023, businesses can claim 130% on plants and machinery investments.
Changes to current rules
The new rules allow for:
- A super-deduction providing allowances of 130% on most new plant and machinery investments, that ordinarily qualify for 18% main rate writing down allowances.
- A first-year allowance (FYA) of 50% on most new plant and machinery investments that ordinarily qualify for 6% special rate writing down allowances.
130% super deduction
This means that for every £1 a company invests, their tax liability is cut by up to 25p. This would apply to assets that are normally allocated to the ‘main pool’, such as:
- Computer equipment
- Plant and machinery
- Commercial vehicles
- Office equipment and furniture (office recycling bins!)
- Software
The above is not a definitive list.
50% FYA deduction
This relates to assets that would normally be allocated to the ‘special rate’ pool such as:
- Integral features, e.g. lifts and air conditioning
- Solar panels
- Insulation
Again, this is not a definitive list.
What is excluded?
Despite the above items being included, certain expenditure will be excluded. Used and second-hand assets do not qualify. If the contract for expenditure was entered into prior to 3rd March 2021 for delivery after 1st April 2021, they will not qualify.
Long-life assets and cars are excluded but vehicles not deemed to be cars (vans, motorbikes etc used for trading purposes) are within the scope. A long-life asset is plant or machinery which would reasonably be expected to have a useful economic life of at least 25 years when new. Assets bought on Hire Purchase Agreements will qualify for the super-deduction.
How does this interact with the existing annual investment allowance?
Unlike the annual investment allowance (AIA) which has a limit of £1m per accounting year until 31st December 2021, the super deduction has no upper limit. Companies planning on investing more than £1m in plant, machinery and equipment in the coming years should consider bringing forward this expenditure in order to take advantage of the super deduction before 31st March 2023.
Give us a call today and we can help talk you through your options and see how we can work together to shape the future of your office recycling programme.
Our range of office recycling bins are designed to make it easy for your people to get involved with recycling, and contribute to the circular economy. Our recycling solutions are perfect for large office environments, schools, universities, break out and canteen areas and more, with bespoke options available so you can create own waste management station with eye-catching signage.
With recycling bins to suit every budget and size office we are sure you will find what you need to improve recycling rates in your workplace and help you show your clients and staff that you care when it comes to looking after the environment. If you need to handle large waste volume, or if you’re really short on space, we’ve got you covered. Whether your office design is classic or contemporary, whether you’re all recycling gurus or just starting your journey, whether you’re looking for the highest quality or the best price, we can help.
We always encourage our clients, when doing a new office fit out, don’t drag in the old, ugly, tatty bins back into your sleek new space. Old bins do nothing to encourage your team to recycle better. Consider updating your recycling stations to suit your new office interiors.
Other capex items the super deduction scheme could cover;
CafeCrush reverse vending machines, for encouraging the recycling of bottles and cans
ProfilGate Footwear & Wheel Cleaning System, to prevent unnecessary dirt, dust, debris and bacteria from entering your manufacturing facilities