Super deduction - Time for new equipment?

[northernladuk]

not sure I'd go for this just yet on the basis of



until the draft legislation becomes law it would be a really dumb move to buy something you don't need. (actually - it would be a really dumb move to buy something you don't need at ANY TIME).

But it's free!!!!!!

[Lance]

So if I buy a new laptop for £2000 and a new phone for £1000 as capital allowance I should be able to deduct 130% corporation tax.

Meaning £3900 deducted from corporation tax.

you sure about those numbers?
The gov are going to pay for the assets and give you £900?

HINT: You're wrong.
They will knock £3900 off you profit calculation before CT instead of £3000.

[Lance]

But it's free!!!!!!

no it's not. It's a discount.

[Lance]

Its best speaking to your accountant but it is my understanding the 130% is applied against the taxable CT calculation. So the CT reduction would be £3,900 x 19% reducing CT bill by £741 in this case.

correct. Sorry I missed your post I was so busy correcting the idiotic suggestion in the first place.

[Lance]

Yes that is correct. They mentioned it in their example:
• 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.
https://assets.publishing.service.go..._factsheet.pdf

surely it's better to correct your original, completely incorrect and hyperbolic post?

[ladymuck]

surely it's better to correct your original, completely incorrect and hyperbolic post?

But it's click bait

[ladymuck]

The OP has just summed up rather well precisely why we have such problems getting our voices heard inside HMRC. Sure, let's spend a silly amount of money (who need a £2k laptop these days?) that we don't have to spend to screw some extra taxes out of HMG because we can...

Grump.....

That's really dumb. So who is allowed, in your eyes, to take advantage of this discount if not a small business owner?

Just because you can't, as you keep telling us you retired last millenium, doesn't mean no-one else should take advantage.

[TwoWolves]

Well, I asked my accountant.

He thinks we will be able to claim it, not that it's going to be game-changing but it's better than nothing.

[Lance]

I don't understand why a discount that lasts for 2 years, would have any bearing on a buying decision for a company device.
If you don't need one then don't buy one.
If you don't need one now it's quite conceivable you might in 2 years so why rush now?

And in any case, if you need one, this extra discount surely isn't going to be anything other than a nice bonus. Not a serious decision input.

[Maslins]

I don't understand why a discount that lasts for 2 years, would have any bearing on a buying decision for a company device.
If you don't need one then don't buy one.
If you don't need one now it's quite conceivable you might in 2 years so why rush now?

And in any case, if you need one, this extra discount surely isn't going to be anything other than a nice bonus. Not a serious decision input.

I think general consensus is the 130% super deduction is mainly aimed at counteracting incentive for big businesses to delay big capital investments. With the main CT rate going up from 19% to 25% in a couple of years, anyone expecting that jump to hit them considering big capital investments might be tempted to delay a couple of years, so the expenditure saves 25% CT rather than 19%. The 130% deduction counteracts that. The fact small businesses can benefit from it too I think is just a side effect that the government don't care about. I imagine the 130% super deduction will disappear at the same time the CT rate goes up.