In the March 2021 Budget the Chancellor announced a brand new ‘Super Deduction’ Annual Investment Allowance. From the 1st April, qualifying new equipment (including Commercial Vehicles) allows a business to offset 130% of the equipment cost against taxable profits in the first year, with no upper limit.
As an example:
- Equipment cost of £50,000 x
- Super Deduction of 130% x
- Corporation Tax of 19% =
- Tax Saving of £12,350
How does Hire Purchase help?
A Hire Purchase facility enables businesses to spread the cost of purchasing new equipment over several years with fixed monthly payments. Businesses that use a Hire Purchase facility to buy equipment can still claim under the Annual Investment Allowance.
A Hire Purchase facility can therefore spread the cost of investment and free up cash flow, whilst allowing the business to benefit from generous tax allowances (as well as offseting the interest charges against corporation tax too). For businesses without the cash to purchase equipment outright, or those that want to preserve cash in the business, a Hire Purchase facility is the ideal solution.
When it comes to the benefitting from the Super Deduction, a Hire Purchase facility truly is finance that fits.
Contact us today to find out more about how we can help you spread the cost of purchasing equipment.