Chartered accountants Douglas Home & Co. are urging British farmers to take advantage of a generous Government super-deduction – before it disappears.
The super-deduction, which could be a potential tax deduction of 130 per cent, is the main element of a range of capital allowance sweeteners launched by the Government in April 2021 to boost business investment. It covers a broad range of farms and agricultural business investments but is due to expire at the end of March 2023 so farms – which operate as limited companies – need to get their ducks in a row quickly.
The main focus of the super deduction is on business “plant and machinery,” an extensive catch-all that can cover everything from tractors and lorries to foundry equipment and refrigeration units. According to Douglas Home & Co., companies that apply in time could see taxes cut by up to 25p for every £1 that they invest, meaning a £1m investment could see a corporation tax saving of £247,000, compared with just £190,000 under the previous system.
Victoria Ivinson, one of six directors at Douglas Home & Co, said, “Remarkably this potential tax break has flown under the radar and many people and businesses have simply missed it, but it could be of particular interest to the farming community.”
She added, “A recent court ruling confirmed that cold rooms and cold stores should be regarded as ‘plant’ with regards to qualifying for HMRC allowances. In this particular case, a tribunal ruled that expenditure incurred on constructing a potato store qualified for plant and machinery capital allowances, as the store fell within the definition of a cold store.
“I would guess that there are farms up and down the country, that may be swithering on committing to this kind of investment, but who are unaware of the potential tax savings if they act sooner rather than later. I would urge them to seek advice before taking any steps as the criteria for qualification are fairly specific.”
Photo source: Douglas Home & Co.