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Super deduction interaction with AIA

Can you claim 130% super deduction without claiming AIA

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If I buy a stapler on 1 April 2021 for £10 can I claim a deduction of £13?

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RLI
By lionofludesch
03rd Mar 2021 23:28

Have you considered waiting for the legislation?

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Replying to lionofludesch:
Psycho
By Wilson Philips
04th Mar 2021 07:24

The draft legislation is already there.

As I’ve suggested elsewhere, it seems to me that for the large majority of companies the 50% deduction is going to be quite irrelevant.

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Replying to Wilson Philips:
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By alistairthurlow
04th Mar 2021 09:57

I think the annual investment allowance also appears to be irrelevant

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Replying to alistairthurlow:
Psycho
By Wilson Philips
04th Mar 2021 10:51

I wouldn't say that it is irrelevant - I would rather be claiming 100% than 50% allowances for S/R expenditure. I would say instead that the 50% deduction is going to be largely irrelevant. I don't have any client that is likely to have an annual spend of more than £1m on S/R assets. For my clients the 50% deduction is likely, in theory, to be of use only for those assets excluded from AIA. I haven't read the detail, but I suspect that the same exclusions will apply to the 50% deduction so my feeling is that I can forget all about it.

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Replying to Wilson Philips:
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By alistairthurlow
04th Mar 2021 09:57

I think the annual investment allowance also appears to be irrelevant

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Replying to alistairthurlow:
By Duggimon
04th Mar 2021 12:19

I disagree, which would you prefer: 50% super deduction on integral features or 100% AIA?

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By Duggimon
04th Mar 2021 08:56

I feel like the draft legislation is surely going to have to expand to introduce some big caveats, because on the face of it this really seems open to abuse.

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Replying to Duggimon:
Stepurhan
By stepurhan
04th Mar 2021 09:20

"So Mr client. ALL your expenses this year are capital purchases are they?"

"Yes, I plan to keep this paper and ink and use it over several years"

I cannot imagine what you mean by abuse. :-)

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By Open all hours
04th Mar 2021 09:21

No. Believe the company should buy its own stapler.

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By petercooperuk
04th Mar 2021 14:10

Is it a really good stapler that will last beyond two years?

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Replying to petercooperuk:
RLI
By lionofludesch
04th Mar 2021 14:29

I've had staplers that have lasted twenty years.

And more.

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By Dib
04th Mar 2021 15:14

Hi Havng listened to the Chancellor's example given during his speech and read a couple of commentaries, the view seems to be that AIA comes first (as it does for any other FYA AFAIAA). This means that the stapler will attract AIA.

I don't know if anyone knows the answer to allocation though. For example if my company spends £3m on general pool assets in the period can I allocate which assets attract AIA and which attract the FYA? This could be important if, for instance, I am purchasing £1m of these assets to hire out (which would be precluded from the FYA because of s46 CAA but not the AIA).

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Replying to Dib:
Psycho
By Wilson Philips
04th Mar 2021 15:38

That's not my understanding - there is certainly nothing in the draft legislation (which is of course always liable to change) to say that AIA must be used in preference to the new FYAs. (It has never been the case that AIA trumped FYAs - if an asset is eligible for FYA then claim that and leave the AIA for other assets).

Remember that the AIA is not automatic - it needs to be claimed.

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Replying to Wilson Philips:
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By Dib
05th Mar 2021 09:24

Thanks Wilson. You are absolutely right. I misread some guidance yesterday which referred to AIA applying to "the first £1m of qualifying expenditure". I think I took it too literally!

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By alistairthurlow
04th Mar 2021 17:22

The chancellor’s example was £10m of expenditure. Under current rules you get £2.6m of capital allowances (£1m AIA plus £9m x 18%) under super deduction you get £13m ( 130% x £10m) www.gov.uk/government/speeches/budget-speech-2021

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Replying to alistairthurlow:
RLI
By lionofludesch
04th Mar 2021 17:38

alistairthurlow wrote:

The chancellor’s example was £10m of expenditure. Under current rules you get £2.6m of capital allowances (£1m AIA plus £9m x 18%) under super deduction you get £13m ( 130% x £10m) www.gov.uk/government/speeches/budget-speech-2021

Let's not overlook the £7.4m you get later. It's better - but not five times better.

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Replying to lionofludesch:
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By GDavidson
06th Mar 2021 14:36

New scheme works out as being a 5.7% grant does it not? Hardly earth shattering.

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rebecca cave
By Rebecca Cave
05th Mar 2021 09:31

No.

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Replying to Rebecca Cave:
Psycho
By Wilson Philips
05th Mar 2021 09:47

Unless you are taking the "I" in the question literally, any particular reason for that answer?

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Replying to Rebecca Cave:
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By alistairthurlow
05th Mar 2021 13:29

Thank you for your detailed and considered response to my question. Pedantry is alive and well in the accountancy profession

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