Super Deduction Tax Relief

In the Spring 2021 Budget the Chancellor announced 130% Super Deduction for main rate assets in the hopes to kick start the economy and promote a speeding up of business investment following the impact of COVID-19. It’s essentially an enhancement to the existing tax relief already available through capital allowances claimed on new qualifying plant and machinery.

Companies would get a 130% first-year allowance on capital expenditure which would normally be eligible for 18% writing down allowances. Unlike the current annual investment allowance (AIA), the super deduction is uncapped.

The main qualifying terms are:

  • Purchases made between 1st April 2021 and 1st April 2023 will qualify provided the taxpayer has not entered into the contract to purchase the asset before 31st March 2021
  • It’s only available to incorporated companies, and only for new plant and machinery, not secondhand or used equipment.

In summary, if you make a qualifying main rate purchase you can claim a 130% first-year allowance on your tax bill. Which means for every pound you invest, your taxes will be cut by 25p. For example, if a company spends £1,000,000 on a new piece of equipment then they can claim a deduction of £1,300,000 against taxable profits.

If you’re looking to benefit from the super deduction and discuss a new test machine project email [email protected] with your requirements or call +44 (0) 1384 482 848.