The Super-deduction. What you need to know.

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This article tells you all you need to know about the new 130% first-year capital allowance for qualifying plant and machinery assets; and a 50% first-year allowance for qualifying special rate assets.

As per the GOV website, from 1 April 2021 until 31 March 2023, companies investing in qualifying new plant and machinery assets will be able to claim:

  • 130% super-deduction capital allowance on qualifying plant and machinery investments
  • 50% first-year allowance for qualifying special rate assets

The super-deduction will allow companies to cut their tax bill by up to 25p for every £1 they invest, as a result the UK capital allowances regime is amongst the world’s most competitive.

This super-deduction will undoubtedly encourage firms to invest in productivity-enhancing plant and machinery assets that will help them grow significantly, and to make those investments now.

What qualifies as plant and machinery?

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

It is worthwhile noting that presently there is not an exhaustive list of plant and machinery assets. In sum the kinds of assets which may qualify for either the super-deduction or the 50% FYA include, but are not limited to:

  • Solar panels
  • Computer equipment and servers
  • Tractors, lorries, vans
  • Ladders, drills, cranes
  • Office chairs and desks,
  • Electric vehicle charge points
  • Refrigeration units
  • Compressors
  • Foundry equipment

Example of Super-deduction in practice

A company incurring £1m of qualifying expenditure decides to claim the super-deduction.
Spending £1m on qualifying investments will mean the company can deduct £1.3m
(130% of the initial investment) in computing its taxable profits.
Deducting £1.3m from taxable profits will save the company up to 19% of that – or
£247,000 – on its corporation tax bill.

GET IN TOUCH WITH ONYX

Do you need help with a super-deduction claim? If you have any queries regarding information in this article, or want to discuss further, please give us a call or e-mail us at  enquiries@onyx.accountants for a FREE no obligation consultation.

Our friendly team of tax specialists are happy to help. Just drop us a line!

Call us on 0121 753 5522 or 01902 759 800. We look forward to hearing from you!

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