HVAC Tax Incentive

If you are looking to replace or upgrade your HVAC systems then now is most definitely the time to do it!

To help stimulate business investment and promote economic growth the government has introduced a new super-deduction tax relief scheme which could see businesses saving up to 25p in tax on every £1 invested in eligible equipment.

This could result in thousands of pounds saved.

But hurry - the scheme has a limited shelf life and investment must be made between the 1st April 2021 and the 31st March 2023.

Read our most recent blog to find out how the super-deduction tax relief scheme can help you save money….

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How you can save tax with your next HVAC upgrade, with this limited time opportunity.

In the 2021 Spring Budget one of the main headlines was the introduction of new accelerated capital allowances rates for plant and machinery. We have been talking to the taxation team at Grant Thornton about these opportunities and they have kindly produced this guidance identifying how customers may reduce their tax bill while upgrading their HVAC system, along with other equipment sold by JCW.

The Budget introduced a 130% super-deduction for plant and machinery that currently qualifies for 18% capital allowances, and a 50% first year allowance for expenditure normally qualifying for the 6% special rate.

The majority of the equipment installed by JCW would be included in this second “special rate” category and would therefore be eligible for the 50% allowance. This includes mechanical installations, heating, ventilation and air conditioning and electrical installations. The 130% could be available on fire safety equipment and other similar products sold by JCW.

How does the super-deduction work?

The super-deduction allows a qualifying business to claim 130% tax relief on plant and machinery; so, for every £100,000 spent, tax relief of £24,700 will be available (£100,000 x 130% @ 19%) instead of the current normal capital allowances tax relief of £3,420.

In addition, a new 50% first year allowance on expenditure, normally qualifying as a special rate pool, is available instead of the normal 6%; this would result in £9,500 of tax relief per £100,000 of spend (£100,000 x 50% @ 19%) compared to the current normal capital allowances tax relief of just £1,140. Special rate pool expenditure typically includes items integral to a property, for example, electrical systems, water systems and heating and cooling installations.

All of these measures go to creating a capital allowance regime that highly incentivises capital investment and may even generate opportunities to claim repayments from HMRC.

Find out more…

For further detailed information about the new allowances that you can provide to your Finance Department, please download the full document here, or you can contact Grant Thornton using the details included therein.

“The HVAC tax incentive provides a fantastic, limited time opportunity that could save businesses thousands of pounds when they upgrade their HVAC systems.” 

Kurt Hedgley | Managing Director of JCW