Super-deduction tax – time is running out

Published by Sandra Smith on

Time is running out to take advantage of the super-deduction tax scheme which was announced in the 2021 budget in order to support the UK economy following the impact of the pandemic and to help boost investment.

The scheme which will end on 31st March 2023, allows businesses investing in qualifying new plant and machinery  to claim:

  • 130% super-deduction capital allowances on qualifying plant and machinery investments.
  • 50% first year allowance for qualifying special rate assets.
  • Annual investment allowance will provide 100% relief for plant and machinery investments up to its highest ever threshold of £1m (until December 2021).

This super-deduction will allow businesses to cut their tax bill by up to 25p in every £1. Only companies that are subject to corporation tax can apply, so this will not be available to sole traders, partnerships or limited liability partnerships.

What are Capital Allowances?

The costs of certain capital assets can be written off against taxable income. Businesses deduct capital allowance when calculating their taxable profits for the year. The two main types of capital allowances are:

Writing down allowance for plant and machinery and structures and buildings allowance.

What is Plant and Machinery?

For the purpose of claiming capital allowances, the most tangible assets are considered plant and machinery. Some examples of assets which would qualify include:

  • Computer equipment and servers.
  • Office chairs and desks.
  • Tractors, lorries and vans.
  • Electric vehicle charging points.
  • Solar panels.
  • Ladders, drills and cranes.

At Clear Vision Financial Management, we specialise in providing an outsourced finance function. We love becoming an integrated part of your business and you will benefit from the experience of a wide team from Finance Director level through to Bookkeeper. Find out more about our outsourced finance department.

The details of the new super-deduction scheme announced in the 2021 budget are quite complex, please get in touch with the friendly Clear Vision Financial Management team. You can call us on 01794 330025 or email us. 

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