It’s never been more important to ensure your tax incentive and relief claims are made on time

Friday, 5th January, 2024

March Y-E?

It’s one of the most common in the UK corporate diary with many companies having a 31st March year-end, and so the two-year deadline to claim valuable tax incentives will affect a higher number of businesses than any other time of the year.

R&D Tax Credits

For SME companies with a March Y-E, it’s your last chance to claim 2 years under the old rates and benefit from CT savings of between 24.7p and 33p in the £1. On 1st April 2023 the introduction of the new reduced rates will impact and bring down claim values to between 16p and 21p in the £1.

As a result, March 2024 Y-Es will be claimed entirely under the new, less valuable rates.

Moreover, for accounting periods starting on or after 1st April 2023, and for companies who have not claimed R&D tax credits in the last 3 accounting periods, there is a requirement to pre-notify HMRC of your intention to claim within 6 months of the intended period of claim. Consequently, for the first-time claimant companies who have a March year-end, now is your last chance to go back retrospectively 2 accounting periods without the need to pre-notify. The claim deadline for your 31 March 2022 Y-E is 31 March 2024 and so it’s important to review your expenditure now.

Capital Allowances

Similarly, your capital spend has time implications too. There is a 2-year window in which to claim accelerated allowances, again, for March Y-Es, the deadline will rapidly be upon us on 31 March 2024.

For instance, on a capital investment project instigated in July 2021, to obtain the most valuable, accelerated allowances, the deadline to claim the March 2022 year-end spend is 31 March 2024.

The below example illustrates the difference in relief, based on the same project, between making a claim within the accelerated window and making it after the deadline has passed. The difference is almost £60,000!

ABC Limited spends £500k on an office refurbishment in the year ended 31 March 2022. Of this amount £100k relates to main pool plant & machinery and £200k relates to special rate pool plant & machinery. Expenditure identified as plant & machinery may attract the best reliefs including first year allowances.

• If the claim is made within 2 years of the end of the accounting period, the allowances give rise to tax savings £62,700, in the year of claim. This may also result in a corporation tax repayment being due from HMRC to the business.
• If the claim is not made in time, first year allowances will not be available and the allowances will instead arise over a significantly longer period of time. In this example, the first-year tax saving would be £5,700, with the remaining tax relief arising over many years on a reducing balance basis. It would be approximately 20 years before 90% of the value would materialise as tax savings.

To make the enhanced capital allowances claim for this project, the deadline is 31 March 2024.

• The YesTax team has specialised in the sector for decades and is staffed by Chartered Accountants (ICAEW and ACCA), Chartered Tax Advisors and technical specialists. We are professionally regulated;
• The team has an intimate understanding of HMRCs application and interpretation of the tax legislation;
• Our due diligence and reporting formats are exemplary and resonate well with HMRC;
• Our claims are prepared in accordance with best practice;
• We typically work through the recommendation of a client’s accountant which engenders close, well-informed, long-term working relationships. We do not cold-call;
• Our engagements are not onerous, you work with us because you want to, and not because you are tied into a long-term engagement;
• We pride ourselves on our client care and the results that we deliver;
• We are a business for good and 2.5% of everything we do goes to vulnerable children here in the UK and overseas. We are actively involved in these initiatives

If you would like an initial, no obligation call, we would be delighted to discuss your eligibility and scope to claim these reliefs with you.

Contact Details

0114 553 7850

hello@yes.tax

YesTax. Positively Better.

 

Image by Freepik