On the 29th October 2022 the Government announced a welcome extension to the temporary increase in the Annual Investment Allowance to £1 million per year to 31st March 2023.
£ per £ tax relief
The Annual Investment Allowance (AIA) is a type of capital tax allowance that offers 100% tax relief on qualifying capital expenditure in the year of purchase. Expenditure on business assets (e.g. plant and commercial vehicles) per year is 100% allowable against taxable profits of a business, deductible in the year that you buy them. This accelerates the tax relief rather than the tiered writing down allowances (WDA) normally applied over several years. Effectively a business can save £1 in taxable profits for every £1 spent on eligible purchases.
This temporary extension to £1 million per year tax relief is available for qualifying expenditure – but the exact amount you can claim is based on eligibility and the timing of the purchase in relation to your financial/tax year end.
Benefit from tax relief on JCBs, commercial vehicles and much more
Most assets claimed for business use qualify including: excavators, telehandlers, tractors, combines, loading shovels, sprayers, and commercial vehicles. Cars cannot be claimed under this scheme.
Expenditure is usually pooled rather than specific items being handled separately and any eligible purchases beyond this £1 million limit would still be eligible for the standard writing down allowances.
Spread the payments and preserve working capital
Claim the AIA against qualifying assets placed on Hire Purchase (HP) – just as if you had paid cash. You can enter into a Hire Purchase agreement for qualifying assets and benefit from the relief prior to all the payments of the agreement being made, in addition to the normal cash flow benefits of using Hire Purchase
What should you do today?
With exceptionally high demand on new plant, commercial vehicles and machinery business are urged to check out the lead times on new orders of new plant, machinery, and commercial vehicles because the relief is only available in the financial year that you make the purchase.
Speak to your supplying dealer to make sure you can benefit from this window of opportunity to save.
Click here to find your local JCB Finance Relationship Manager to discuss a tailored Hire Purchase facility to match your cashflow. Alternatively, please click below to request a call back.
JCB Finance Ltd Registered in England No.972265 Registered Office: The Mill, Rocester, Staffordshire, ST14 5JW. JCB Finance Ltd is authorised and regulated by the Financial Conduct Authority (Firm Reference Number: 708332). Finance is restricted to business users in the United Kingdom, subject to acceptance by JCB Finance Ltd and our usual affordability checks. JCB Finance Ltd is not a tax or financial advisor - always seek advice from your accountant or finance director, because every business’ circumstances are different. Businesses should not make investment decisions purely on a tax basis - there should be a compelling business case for the investment.