Super Tax

Want to know how Rishi Sunak has helped Amazon avoid tax for another two years?

As part of his incentives to help companies through the pandemic, he introduced a "super-deduction" scheme. It is available for those capital investments undertaken between April 1, 2021 and March 31, 2023.

The new government's super tax deduction intends to encourage firms to make capital expenditures that would enhance productivity. It is vital that your organisation is aware of and fully utilises these appealing new tax incentives while they are still available.

The super deduction and SR allowance provide enterprises that invested in qualified equipment with a substantially higher tax deduction in the tax year of acquisition than might otherwise be the case - a 'first-year allowance' (FYA).

So…how much tax relief are we eligible for?

The super deduction provides relief at 130% of the qualifying expenses, as opposed to the standard 18% write-down allowance for investment in main pool plant and machinery assets. The SR allowance relieves pressure at 50% of the qualifying cost in the initial year, with the remainder going into the regular usual rate pool and being written off at the typical 6% rate in subsequent years.

What is going on with Amazon?

As a result, Amazon didn't pay any taxes in 2021.

The business has already put aside over £66 million against its tax bill for the coming year, based on a projected £250 million in trading losses beginning in 2021. Amazon might avoid paying taxes in the UK for another two years. According to the Fair Tax Foundation, they claimed over £800 million in capital expenses last year, which are company expenditures that may be deducted from earnings.

Last year, the company invested over £2.3 billion in infrastructure. Amazon claims that because of the COVID pandemic, it increased its investment in warehousing and logistics. Last year, they opened five new warehouses in Swindon, Dartford, Gateshead, Hinckley, and Doncaster, three of which were equipped with cutting-edge robotics technology.

It also continues to construct and manage data centres in the United Kingdom for its cloud business, AWS.

“Even before the super-deductions, Amazon paid little corporation tax in the UK, in part because the bulk of their UK income is still booked in Luxembourg,” Fair Tax Foundation chief executive Paul Monaghan told The Guardian. (‘Amazon Could Avoid UK Tax for Another Two Years -’ 2022)

In response to the news, an Amazon representative stated: “The Government uses the taxation system to actively encourage companies to make investments in infrastructure and job creation. These capital allowances are available to all eligible UK companies. Last year, we invested more than £11.4bn in the UK, building four new fulfilment centres and creating more than 25,000 jobs. Our total tax contribution increased to £2.77 billion – £648 million in direct taxes and £2.13 billion in indirect taxes – as we have continued to grow and invest right across the UK.”

(‘Amazon Could Avoid UK Tax for Another Two Years -’ 2022)