With the September Mini-Budget businesses may wonder how this will affect the capital allowance tax relief regime going forwards to consider in their tax planning strategies.

Julie Hopkins (JH) of Buyacarehome and Ownacarehome speaks with Jonathan Jex (JJ) of JEX CAPITAL ALLOWANCES

JH: Is there good news for care home owners considering extending or refurbishing their care homes or even building or buying a new one?

JJ: Under the capital allowances regime the Annual Investment Allowance (AIA) gives a 100% write-off on certain types of plant and machinery in buildings up to set expenditure limits.  The limit has been £1 million since 2019 with a reduction to £200,000 planned from April 2023. 

The GOOD NEWS is the Government announcement in the budget that the temporary £1 million AIA limit will become permanent, and the proposed reduction will not occur.

This is particularly GOOD NEWS if a care home business is planning CAPITAL EXPENDITURE over the next few years, as for most projects there will be a 100% write off of qualifying expenditure on plant and machinery in the year in which it is incurred.

JH: What can you tell care home businesses about the capital allowance super tax deduction?

JJ: Interestingly there was no mention in the Mini-Budget of the super-tax deduction which enables companies investing in qualifying NEW plant and machinery up to 31 March 2023 to benefit from an enhanced allowance of 130% of qualifying expenditure, referred to as ‘super-deductions.’

JH: Which business entities can benefit from the super-tax deduction?

JJ: This enhanced super-deduction is not available for unincorporated businesses.

JH: When will the super-deduction relief cease?

JJ: With no further information to the contrary, it appears that the scheduled withdrawal of the super-deduction will occur in 2023 as planned.

This provides a tax planning opportunity for incorporated businesses planning on incurring expenditure on plant and machinery.  Care Home owners should carefully consider the timing of expenditure to optimise their cashflow and incur the expenditure prior to 31 March 2023 and always speak to a tax expert.

For more information on the capital allowance regime contact Jonathan Jex of Jex Capital Allowances on 0845 3454964 or 07785 503362 jpj@jexca.co.uk