Spring Budget 2023: With super-deduction ending, Full Expensing (FE) introduced to further boost investment
If you’re planning to install a cold room on your premises, you may not be aware that you could claim capital allowances to relieve the burden of tax on your business. This is because many cold rooms fulfil the definitions of “plant and machinery” established by HMRC.
MTCSS are here to help you understand everything you need to know about the new scheme put in place, replacing the super-deduction, that allows your business to benefit from a new cold room installation.
The Chancellor confirmed in his Spring Budget, that the super-deduction capital allowance initiative announced in the Spring 2021 budget, would be coming to an end on the 31st March 2023.
Under the scheme, companies investing in qualifying new plant and machinery assets from 1 April 2021 until 31 March 2023, benefit from a 130% first-year capital allowance which would have previously qualified for 18% relief, and a first-year allowance of 50% on most new plant and machinery investments which would have previously qualified for 6% relief.
Investing companies also benefit from a 50% first-year allowance for qualifying special rate (including long life) assets.
This upfront super-deduction aimed to support businesses invest post pandemic, allowing companies to cut their tax bill by up to 25p for every £1 they invest.
Whilst there is still time for you to make a capital investment for your new cold room under the old scheme, the Chancellor announced reforms to the capital allowance system yesterday that continues to incentivise capital spending.
Qualifying Cold Room Solutions From 2023
He also announced that effective from 1st April 2023 to 31st March 2026, company expenditure on qualifying plant and machinery can now claim:
- 100% first year allowance – i.e. 100% of the cost from their profits straight away (FE) – rather than more slowly over the life of the asset.
- 50% first year allowance for qualifying special rate assets (a 3 year continuation on the current scheme)
Similar to the super-deduction, FE also results in a 25p tax saving for every £1 invested (19% x 130% super-deduction rate = 25%).
Nicola Burston, Finance Director of MT Cold Storage Solutions said “With planned increases in corporation tax in April 23 from 19% to 25%, it is good to see this additional support being offered to businesses, encouraging their decision to invest in MTCSS’s cold rooms”.
At MTCSS we can advise about the range of cold rooms available to ensure they meet the needs of your business, so please get in touch with our expert team if you’d like more information.
Email us at sales@mtcss.flywheelsites.com, call us on 01886 833381 or fill in an enquiry form below!
