Companies to enjoy full expensing for capital items
The Budget included welcome news for companies facing the end of the super-deduction later this month, with a period of full capital expensing announced. What are the details?
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Accounting for VAT if there is no cash payment
Your business has submitted repayment returns for the last two quarters and you are concerned that you might have underpaid output tax on some supplies where no money has changed hands. Are your concerns justified?
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Treatment of distributions under review
The government has launched a consultation on modernising the tax treatment of distributions and repayments of capital by companies. The proposals could affect the distinction between dividends taxed as income and capital payments subject to CGT. What changes are being considered?
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Tax relief on equipment you haven’t paid for (yet)
The timing of tax relief for purchases of equipment isn’t straightforward when payments are delayed or goods are purchased through hire purchase (HP) agreements. How can you use these rules to your advantage and get tax relief before you’ve paid the final invoice?
The super-deduction is ending on 31 March 2023. This temporary measure gives companies an enhanced deduction for capital expenditure on “main rate” capital equipment, e.g. plant and machinery. A key feature of the super-deduction is that it is not subject to an upper limit. Unincorporated businesses are restricted in what capital expenditure they can write off in year one by the annual investment allowance (AIA). In order to avoid a cliff edge, the government has announced that from 1 April 2023 to 31 March 2026, companies will be able to claim a 100% first-year allowance for main rate items, with no upper limit. As the main rate of corporation tax is increasing to 25% from 1 April, this three-year period will be a good time to incur any significant expenditure that might otherwise be restricted, e.g. if companies are subject to the AIA after 31 March 2026.
As an additional measure, the 50% first-year allowance for “special rate” items will continue for the same three-year period.
More information can be found in the policy paper.
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