Technology and Machinery

• A tax allowance based on qualifying capital expenditure
• Available to all sectors and size of business (up to a maximum amount)

Capital Allowance is the amount of expenditure that a business may claim against its taxable profit. British businesses are entitled to claim capital allowance on items they have purchased for use in their business. This includes items such as equipment, machinery and vehicles which are known as plant and machinery and classified as capital expenditure. Capital expenditure involves purchasing with a single payment an enduring asset for the benefit of the trade of the business in question. Capital expenditure can also involve varying a fixed asset that goes to the core of a business, such as the cost of varying a lease (but not the lease itself), and replacing (though not repairing) a fixed asset.

Businesses can also claim capital allowances on some capital expenditure related to research & development and renovating business premises. However, businesses can’t claim capital allowances on leased items, buildings, land, structures and items used only for business entertainment.

One of the most common types of Capital Allowance is the Annual Investment Allowance (AIA) in which you can deduct the full value of an item from your profits before tax. This allowance enables businesses to claim up to £200,000 over a 12 month period. You can claim AIA on most plant and machinery except cars, gifts and items which were owned prior to their use in your business.

Click here for more information on Capital Allowances.

• An enhanced tax allowance based on qualifying capital expenditure
• Available only in the year of purchase
• Only applicable to certain items classified as energy or water efficient equipment

One type of capital allowances is first year allowances, which are often referred to as an enhanced capital allowance. For enhanced capital allowances, you can also deduct the full cost from your profits before tax. First year allowances can be claimed in addition to the annual investment allowance, so therefore they will not count towards a business’s AIA limit. As the name suggests these deductions can only be made in the year of purchase on items classified as energy or water efficient equipment. Click here for more information.

Businesses can also claim written down allowances on assets that are not eligible for AIA. Written down allowances are used when a business has already claimed a full limit of the Annual Investment Allowance for the current taxation year or the item they are claiming for doesn’t qualify for AIA (cars, gifts etc). Writing down allowances is when you deduct a percentage of the value of an item from your profits each year. The percentage deducted varies depending on the item and in the case of vehicles – the level of CO2 emissions they emit.  Click here for more information.

Click here for a full list of energy technology products applicable to the Enhanced Capital Allowance Scheme.

The Water Technology list consists of 14 categories of water technologies on which the First Year Capital Allowances can be claimed. Click here for a full list of eligible water technologies and products.

• Tax deferral on capital gains tax on qualifying assets that are due to be replaced

Where a business is selling an asset (that has appreciated in value since it was purchase, e.g. land) with the intention of purchasing a replacement at a later date, it may be possible to utilise Business Asset Rollover Relief. It is a deferral of tax liability, not an exemption or reduction. It applies when a defined business asset is sold and a replacement purchased for the same or a greater price within 3 years (or purchased up to 1 year previously).

Instead of being taxed on the ‘gain’ from selling the old asset immediately, the taxable amount can be deferred and treated as if deducted from the cost of acquiring the replacement. When the replacement asset is later sold, the total amount of tax deferred (plus any additional due from ‘gain’ on the later asset) will need to be paid – unless further business Asset Rollover Relief is successfully applied for and it is deferred again.

Where proceeds are used to purchase fixed plant or machinery or replacement assets expected to last for less than 60 years it should be noted that tax will be deferred for a maximum of 10 years from their acquisition.

Business Asset Rollover Relief is not applied automatically, organisations must make a claim. If no replacement asset is in fact purchased, the organisation is still responsible for paying the original tax due in full.

Applicable categories of business asset can be found here.

Slightly different rules also apply where only part of the proceeds from selling the replaced assets are reinvested, or the replaced assets were not solely used in your business. Full information can be found here.

• Up to £3,000 voucher towards the cost of a gigabit capable broadband connection
• Available for qualifying SMEs

In March 2018, the Government announced a £67m Gigabit Broadband Voucher Scheme as part of the Local Full Fibre Networks programme, which aims to increase full fibre coverage across the UK. The voucher scheme is available to small and medium sized businesses that can use the vouchers to contribute towards the installation cost of a gigabit capable connection. Businesses are entitled to claim up to £3,000 against the cost of connection. You can apply on an individual basis or as part of a group project.  If you are eligible for gigabit vouchers, you can access the scheme through a supplier.  Click here for further information.      

• Single point of contact for business advice, funding and support for any business

Growth Hubs are local public-private sector partnerships led by the Local Enterprise Partnerships (LEPs). They exist to join up national and local business support and offer free support for business development.

The Greater Birmingham Chambers of Commerce are a delivery partner for the Greater Birmingham and Solihull (GBS) LEP Growth Hub, which exists to provide co-ordinated, effective first-class business advice, funding and support services across Greater Birmingham.

The GBS LEP Growth Hub is a single point of contact for business advice, funding and support for any business across Greater Birmingham. It brings together all services and partners offering business support in the region through a web portal and expert advisers. The Growth Hub will either provide support directly to businesses or refer them to specialist advice through partner organisations.

Click here for more information and to contact the GBS LEP Growth Hub.