Super Deduction

• 12 Sep 2021
• 2 Comments

Super Deduction

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

From 1 April 2021 until 31 March 2023, companies investing in qualifying new plant and machinery assets will be able to claim :

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

The government has offered exceptional support for businesses during Covid. Even so, pandemic-related economic shocks and the accompanying uncertainty have chilled business investment. This super-deduction will encourage firms to invest in productivity-enhancing plant and machinery assets that will help them grow, and to make those investments now.

For Example :

• A company acquiring a qualifying asset of worth £1,000 decides to claim the super-deduction.
• Spending £1,000 on qualifying investments will mean the company can deduct £1,300 (130% of the initial investment) in computing its taxable profits.
• Deducting £1,300 from taxable profits will save the company up to 19% of that – or £247 – on its corporation tax bill.