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Capital allowances on fleet vehicles – Super-deduction

Can you claim super deductions on your fleet vehicles?

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Transport and Logistics companies who purchase eligible assets such as vans and other fleet vehicles can claim the super-deduction (a deduction of at 130% of the cost of the asset) against taxable profits. The relief is separate to the Annual Investment Allowance (AIA), which can then be used to obtain tax relief on other fixed assets. There is no upper limit on the amount of super-deduction which can be claimed, and assets bought either via hire purchase or directly outright are eligible.

For example, if an asset cost £100,000, this would generate a tax deduction of £130,000, saving tax in the hands of the company of £24,700. This is £5,700 more than using annual investment allowance alone.

If your company is weighing up the options of acquiring vehicles outright or via hire purchase as opposed to finance lease arrangements, it’s worth considering the additional tax benefits the super-deduction can provide and how much tax can be saved upfront.

Assets under finance lease arrangements do not qualify for the super-deduction, however tax relief is available via claiming the depreciation charged to the profit and loss account over the life of the asset. Depending on the circumstances or if it’s unclear, it would be worth reviewing the contract terms to ensure the correct tax position.

Further details on van/lorry financing options can be found here:

The super-deduction will continue to be available to companies on purchases of eligible assets up until 31 March 2023. (For accounting periods straddling 1 April 2023, special transitional provisions will apply).  Therefore, companies should consider the timing of any capital spend sooner rather than later to take advantage of the super-deduction whilst it remains available.

For more information on these super deductions contact Donna Kenyon below:

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