Super Deduction

Super Deduction

Super-Deduction

The government has offered unprecedented support for businesses during Covid.  The new introduction of the Super Deduction will give companies a strong incentive to make additional investments in plant and machinery to lower their tax liabilities and help them grow.

For expenditure incurred from 1 April 2021 until the end of March 2023, companies can claim 130% capital allowances on qualifying plant and machinery investments.

• Under the super-deduction, for every pound a company invests, their taxes are cut by up to 25p.

The new Capital Allowances offer

As a result of measures announced at this Budget, businesses will now benefit from four significant capital allowance measures:

• The super-deduction – which offers 130% first-year relief on qualifying main rate plant and machinery investments until 31 March 2023 for companies

• The 50% first-year allowance (FYA) for special rate (including long life) assets until 31 March 2023 for companies

Annual Investment Allowance (AIA) providing 100% relief for plant and machinery investments up to its highest ever £1 million thresholds, until 31 December 2021

• Within Freeport tax sites, companies can access new Enhanced Capital Allowances (ECA), and companies, individuals, and partnerships can benefit from an increased level of Structures & Buildings Allowance (SBA) for investments until 30 September 2026.

What are Plant and Machinery?

Most tangible capital assets used in the course of a business are considered plant and machinery for the purposes of claiming capital allowances.

There are different types of Capital Allowances for different types of investments which are set out here.

To see examples of the Super Deduction in practice, visit our webpage.

Full guidance can be found on the Gov.uk website