Eligible businesses can claim asset deductions immediately in the year that the asset was first used or set up, rather than being claimed after that current year (regardless of the cost).

These assets can be:

• new depreciable assets
• improvements to existing eligible assets, and
• second-hand assets

This was introduced in the 2020-21 Budget and has now been extended until 30 June 2023. It covers assets that will be first used or installed by 30 June 2023.

Some expenses are excluded, including improvements to land or buildings that are not treated as plant or as separate depreciating assets in their own right. Expenditure on these improvements would still normally be claimed at 2.5% or 4% per year.

For companies, it is important to note that the loss carry back rules have not been extended to 30 June 2023 yet as the relevant legislation is waiting to be passed.

Loss Carry-Back rule

If a company claims large deductions for depreciating assets in a particular income year and this puts the company into a loss, then the tax loss can generally only be carried forward to future years. However, the loss carry-back rules allow some companies to apply current year losses against taxable profits in prior years and claim a refund of the tax that has been paid.

At this stage, the loss carry-back rules are due to expire at the end of the 2022 income year, but it is expected that the rules will be extended to cover the 2023 income year as well.

Our biggest tax deduction tip: Never buy things you don’t need just for the tax deduction – it’s still money out of your pocket!

Make sure you chat to your Aintree Group advisor for individual advice. Contact us today.