What does super-deduction tax allowance mean for optical practices?
Recently announced in the latest spring budget 2021 from Rishi Sunak.
Example 1 – OCT purchase.
Asset cost: £25,000 + VAT
Tax relief with super-deduction: £6,250 + VAT (previously £4,750)
This is calculated as follows: 25,000 x 0.25 = 6,250 as you gain 25p tax relief for every £1 investment.
Example 2 – £50,000 investment.
Asset cost: £50,000 + VAT
Tax relief with super-deduction: £12,500 + VAT (Previously £9,500)
This is calculated as follows: 50,000 x 0.25 = 12,500 as you gain 25p tax relief for every £1 investment.
Super-deduction key point summary:
- Effective from 1st April 2021 – 31st March 2023
- Relevant for all Ltd Companies. Not sole traders, partnerships, or LLPs at present.
- 130% super-deduction capital allowance on qualifying plant and machinery investments.
Great news for optical practices, trading as Ltd Companies, wishing to invest in equipment, shop-fit and technology.
- As the current corporation tax rate is 19% (19p in the pound) then this 25p relief is actually a 131.5% benefit
- Small to medium practices need to be aware of VAT de-minimis and funding via a lease as traditional leasing is not eligible for the super-deduction.
- A Long Funding Lease (85-month term) is available, which preserves the VAT de minimis limit and allows the customer to claim the Annual Investment Allowance such as the super-deduction tax allowance.
- If a practice breaks VAT de minimis, a Hire Purchase facility can be arranged to spread the cost and be eligible for the super-deduction claim.
Speak to one of our expert advisors on: 01536 52 96 96 or contact optical@perfin.co.uk