Business News

Super-deduction – What you need to know

The super-deduction is a temporary capital allowance that allows companies to invest in new qualifying plant and machinery but is perhaps more generous than any other scheme that has come before.

Available since 1 April 2021, the super-deduction and associated first-year allowance, is an excellent incentive for investment, but companies need to act quickly to take advantage of it.

Using this new measure, companies can claim a super-deduction providing an allowance of 130 per cent on most new plant and machinery investments that ordinarily qualify for main rate writing down allowances.

They can also use the first-year allowance of 50 per cent on most new plant and machinery investments that ordinarily qualify for special rate writing down allowances.

There is not an exhaustive list of plant and machinery assets. The kinds of assets which may qualify for either the super-deduction or the 50 per cent 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

Certain expenditure is excluded, for example, the acquisition of company cars. To benefit from the relief the assets purchased must also be new and not second-hand or refurbished equipment.

The relief is only available to limited companies, but unincorporated businesses can continue to benefit from the Annual Investment Allowance (AIA), which permits a deduction of 100 per cent for qualifying plant or machinery expenditure up to the threshold of £1 million.

If you want to make a claim via this capital allowance scheme, now is the time to take action before 31 March 2023.

To find out how we can help you make a claim before time runs out, please contact us.