Make the most of tax breaks when buying new equipment


Make the most of tax breaks when buying new equipment

This page was last updated on April 1, 2023

Companies investing in qualifying new equipment and machinery can benefit from helpful capital allowances.

Capital allowances let taxpayers write off the cost of certain capital assets against taxable income. They take the place of accounting depreciation, which is not normally tax-deductible.

There three main types of capital allowances:

All change for capital allowances

Businesses deduct capital allowances when calculating their taxable profits.

Between 1 April 2021-31 March 2023, they were able to claim:

From 1 April 2023- 31 March 2026, companies incurring qualifying expenditure on the provision of new plant and machinery can claim:

These temporary allowances may be extended beyond 31 March 2026.

Making the most of the various allowances available

As mentioned, in addition to the new plant and machinery allowances, companies can use the Annual Investment Allowance (AIA) for purchases of second-hand equipment. In the Spring Budget 2023 its £1 million cap was confirmed as permanent.

In addition, the first-year allowance for electric vehicle charge points has been extended until 31 March 2025 for corporation tax and 5 April 2025 for income tax.

Freeport tax sites and 12 new investment zones (the latter announced in the Spring 2023 Budget) will also give companies can access to new Enhanced Capital Allowances (ECA+), Structures & Buildings Allowance (SBA+) in England and secondary Class 1 NIC relief.

Can we help?

If you are planning to invest in new equipment, IT systems, office furniture, lorries or vans, solar panels etc do get in touch for advice on making the most of the new allowances and tax savings.

Specific advice should be obtained before taking action, or refraining from taking action, in relation to this summary. If you would like advice or further information, please speak to your usual Shipleys contact.

Copyright © Shipleys LLP 2023

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