For example, if all the costs (salary, materials, ancillary) total £50,000 per account. The enhanced additional tax deduction is 130%.
Therefore another £65,000 (130% of £50,000) is deducted from the taxable profit in the tax computations submitted to HM Revenue & Customs.
This results in a tax saving of £12,350 (19% company tax on £65,000).
Additional tax deduction results in a repayment of overpaid company tax or a cash cheque from HMRC of 14.5% of the additional deduction. In this case £9,425 (14.5% of £65,000).
This deduction does not affect the accounting profit so has no impact on profit reporting to third parties such as customers, suppliers and lenders.