Capital Allowances: Super Deduction

Please find below a short summary of a new scheme announced in the 2021 budget known as the “super deduction” and other changes to capital allowances.
New Capital Allowances Offer
For expenditure incurred from April 1st 2021 until 31st March 2023, any limited company can now benefit from three significant capital allowance measures:

  • 130% super-deduction on plant and machinery.
  • 50% “special rate” allowance, on other qualifying assets.
  • An increased level of Structures and Buildings Allowance.

With the new super deduction for every £1 reinvested in your business in the form of plant and machinery additions, corporation tax in that accounting period can be cut by up to 25p.

Assets covered by the deduction (although this is not an exhaustive list) could include:

  • Solar Panels
  • Computer equipment and servers
  • Tractors, lorries, vans
  • Ladders, drills, cranes
  • Office chairs and desks
  • Electric vehicle charging points
  • Refrigeration units
  • Compressors
  • Foundry equipment

Please note that this is only for plant and machinery assets that are purchased brand new, if they are second hand then standard annual investment allowance can be used up to the limit of £1,000,000.

If you have any questions about the super deduction, or capital allowances more generally, then please do get in touch.