investing in qualifying new plant and machinery can claim: • full expensing providing allowances of 100% on most new plant and machinery investments that ordinarily qualify for 18% main rate writing down allowances • a first year allowance of 50% on most new plant and machinery investments that ordinarily qualify for 6% special rate writing down allowances. This relief is not available for unincorporated businesses and will typically be most useful where companies or groups invest over the AIA of £1,000,000 in new plant and machinery. Tax relief for expenditure on Research and Development (R&D) Companies with expenditure in qualifying R&D activities can receive tax relief. For accounting periods starting on or after 1 April 2024, the previous SME scheme and the R&D expenditure credit (RDEC) scheme will merge. The new scheme will broadly follow the rules of the RDEC:
• There will be a 20% above the line credit. • Loss-making companies will benefit from a notional tax rate of 19% (small profits rate) and not 25% (main rate), increasing the benefit. • Where R&D activity is sub-contracted out, the company who bears the risk will be the one to make the claim. • Claims will be restricted to UK-based activities and workers, subject to specific exemptions. R&D intensive companies will operate under a separate scheme, with enhanced relief where R&D expenditure accounts for 30% or more of total expenditure. This is a complex area. Please get in touch if you would
Tax Tip Marginal relief has the impact that any profits falling between £50,000 and £250,000 are effectively taxed at 26.5%. Therefore, maximising deductions available will be particularly important for those companies whose profits fall between these thresholds. We can assist you with identifying any claims for deductions for your business. Tax on profits The profits of a limited company are calculated in a similar way as for unincorporated businesses and the same rules with regard to expenses and capital allowances generally apply. Remember though that the salaries paid to directors (but not the dividends paid to shareholders) are deductible from the profits before they are taxed. Tax Planning Companies are a popular business structure as they may result in less tax being paid overall. However, the saving is dependent on profits and withdrawals. We would be happy to discuss the implications of incorporation with you before you decide whether or not to incorporate your business. Capital allowances for companies - full expensing In addition to the AIA and general writing down allowances which are available to companies as well as unincorporated businesses, from 1 April 2023 companies
like to know more. Payment of tax
Corporation tax is usually payable nine months and one day after the year end but payments may be accelerated for large companies.
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