Super Deduction calculations when the period end straddles 1 April 2023

Claiming the super-deduction in a period that straddles 1 April 2023

The rate of the super-deduction will require apportioning if a CT period in which the qualifying expenditure occurs, straddles 1 April 2023. The rate should be apportioned based on days falling prior to 1 April 2023 over the total days in the CT period:

• Divide the number of days before 1 April 2023 by the total days in the accounting period
• Multiply that amount by 30
• Add 100 to the above result

This provides the apportioned % rate to multiply by.

Example

A company buys a piece of machinery for £250,000 in the year ended 30 April 2023 which qualifies for the super-deduction allowance.

Days before 1 April 2023 = 335

Total days in the accounting period = 365

335/365 = 0.92

0.92 x 30 = 27.5

100 + 27.5 = 127.5% is the rate to multiply the qualifying expenditure by.

Super-deductions assets disposed of in a period that straddles 1 April 2023

If a disposal of these assets takes place in a CT period that straddles 1 April 2023, the rate used to determine the taxable proceeds is apportioned in the same way as it is for determining the amount of allowance when the asset is purchased in a straddling period:

• Divide the number of days before 1 April 2023 by the total days in the accounting period
• Multiply that amount by 30
• Add 100 to the above result

This provides the apportioned rate % to multiply the disposal proceeds by.

Practically, this means that for periods ending on or before 31 March 2023, proceeds are taxed on 130% of the amount received, whilst for periods straddling 1 April 2023, proceeds are taxed at a hybrid rate. For periods starting on or after 1 April 2023, proceeds are taxable at 100% of the proceeds received.

For details on how TaxCalc will help you by automating the calculations please see our article :Super-Deduction and FYA capital allowances available between 1 April 2021 and 31 March 2023