Super-deduction – what is it and what does it mean for you?

April 1, 2021

Are you aware of the new Super-Deduction in place from 1^st April 2021 until the end of March 2023 that allows you to claim 130% capital allowances on qualifying plant and machinery investments?

As part of the post-pandemic economic recovery plan within the 2021 Budget, the Chancellor of the Exchequer Rishi Sunak has unveiled a new “Super-deduction”, a £25bn tax break aimed to spur post-pandemic growth.

So, what does this mean for you?

For every pound your business invests in qualifying plant and machinery assets, you could be eligible to claim 25p in every £1 in your tax bill. All purchases must be completed between 1^st April and the end of March 2023.

How does this impact the Annual Investment Allowance?

The Super-deduction that allows you to claim 130% capital allowances, surpasses the existing Annual Investment Allowance (AIA) that provides 100% tax relief for plant and machinery investments. Many businesses that do not qualify for the Super-deduction will still be able to take advantage of the AIA, which has a £1 million threshold and is available until 31^st December 2021.

Can I use the Super-deduction if I am financing the purchase?

Companies using finance to invest in plant and machinery through hire-purchase type arrangements are also be able to access the super-deduction, provided payments are being made to acquire the asset.

Now is the time to act!

Given the limited lifespan of the tax break and the timings involved in decisions on expenditure on plant and machinery, companies should start planning now. With no upward limit and a limited lifespan, businesses looking to take advantage of this tax break should consider bringing forward planned investments.

Experts on hand at Molson Finance.

With a knowledgeable and approachable team on hand to assist you with any capital equipment financing solutions, Molson Finance can help you get the best financing solution for your business. Contact us today to discuss how we can help you access the best funding solutions at the most competitive rates, allowing your business to flourish.

Further resources: