Do you have a commercial property in need of an update? Not sure what allowances you can claim! Perhaps you have already carried out certain work on your properties, therefore have you made a claim for R&D yet? Read on to find out more about:
- Why NOW is a good time to invest; and
- R&D Tax Credits in the Building and Construction Industry
WHY NOW IS A GOOD TIME TO INVEST
Two New Capital Allowance Rates
If you are considering carrying out any construction, extension and renovation works then NOW is a good time to invest in your commercial properties and benefit from two new allowances. But don’t waste time thinking about it as they won’t be around forever.
Capital allowances tax relief enables commercial property owners to obtain tax relief on incurred capital expenditure. Qualifying commercial property includes shops, hotels, pubs, factories, industrial units, doctors surgeries to name just a few.
Given that Covid-19 is costing the UK economy so much, the changes to capital allowances are positive. Even if only in the short term.
The Super Deduction – The New Rates Explained
A First Year Allowance (FYA) is available for expenditure incurred by companies (although not property businesses) on new plant and machinery (P&M).
The expenditure must be incurred between 1st April 2021 and 31st March 2023 under a contract entered in to after 3rd March 2021.
The new First Year Allowance rates are:
- General Pool – 130%
- Special Rate Pool – 50%
Expenditure on General Pool P&M will attract the FYA of 130% (a Super Deduction). Assets which would ordinarily be written down at just 18% per annum. Assets within this context include fire alarm systems, security systems and carpet flooring.
Expenditure on Special Rate Pool P&M will receive a 50% FYA (a SR Allowance). Assets which ordinarily would be written down at just 6% per annum. Assets such as, lifts, heating and cooling systems, and solar shading are good examples.
The super-deduction will allow companies to cut their tax bill by up to 25p for every £1 they invest, ensuring the UK capital allowances regime is amongst the world’s most competitive.
Annual Investment Allowance (AIA)
The £1million AIA will remain in place until 31st December 2021 and will return to £200,000 thereafter.
The Post-Budget Tax Savings
Your business could save a huge amount of tax simply by investing now and benefiting from these new tax rates. By utilising the Annual Investment Allowance in the most tax advantageous way we can show you how the post-budget introductions can provide a much faster and greater amount of total tax relief on the same expenditure incurred pre-budget.
With these invaluable incentives currently in place, it’s perhaps never been a better time to invest. Contact our friendly tax team now to find out how much tax you could be saving.
R&D TAX CREDITS IN THE BUILDING AND CONSTRUCTION INDUSTRY
How and Why a Business may Qualify
Research and development (R&D) tax credits can have a huge financial benefit to a company including builders, manufacturers, fitters, trades, engineers, and other suppliers.
There are many reasons why a business will consider investing in construction costs with the more common themes being:
- demand for sustainability,
- energy efficiency,
- carbon reduction,
- improved off-site fabrication and
- advances in digital technology
All of which are creating a wave of innovation within the construction industry. Through modern architecture and its innovative design approaches, and the requirement for energy-efficient structures, there is a definite need for construction to get smarter and more efficient too.
Innovation Leads to Qualifying R&D Activities
The construction industry continues to utilise new materials, processes and techniques in order to create quality structures which are attractive, energy efficient, compliant with building regulations, and low maintenance. More innovative tools and techniques leads to qualifying R&D activities.
R&D is a Hot Topic on Construction, Extension and Renovation
Where solutions are being created (or attempted) which are unique or not readily known to experts in the industry, qualifying R&D is likely. Changing regulations and demanding socio-economic requirements continue to challenge the sector, and is exactly why it’s a hot topic for R&D. In order to meet these challenges and remain competitive in the industry, companies endeavour to develop suitable tooling or technical solutions to overcome complex problems, typically relating to bridges, dams, roadways, buildings and other structural objects too.
Calculating the Tax Saving
The R&D tax relief scheme is an unmissable opportunity to claim either a reduction in corporation tax of up to 24.7p in the pound or, for loss making companies, a payable tax credit of up to 33.35p of any pound spent on qualifying R&D activity.
How Onyx Accountants Can help You
Wondering if your business would qualify? Perhaps you have an investment project in the pipeline – our friendly tax team are ready to help you on Construction, Extension and Renovation
Our Tax Specialists are able to segregate new expenditure and also unlock unclaimed historic expenditure to achieve the full extent of available tax savings in your property portfolios.
Whether you are making a claim or not, there isn’t a question we can’t answer about this sector. We undertake complimentary reviews to ensure you are maximising the opportunity, so whatever your circumstances, please get in touch!
GET IN TOUCH WITH ONYX
If you have any queries, or want to discuss further, please give us a call. Or e-mail us at firstname.lastname@example.org for a FREE no obligation consultation.