Launched earlier this year, the new super-deduction is a capital allowance created to help companies looking to invest in new qualifying plant and machinery.

Designed specifically to encourage firms to invest in assets that will help them grow and recover from the impact of COVID-19, this new tax relief is part of the Government’s package of financial support.

This new scheme is available to companies until 31 March 2023, offering them an incentive to invest in improvements to their businesses that will aid their recovery by offering significant Corporation Tax relief.

Using the super-deduction, companies can claim:

  • A super-deduction providing allowances of 130 per cent on most new plant and machinery investments that ordinarily qualify for main rate writing down allowances, such as compressors, electric vehicle charge points and computer equipment and servers.
  • A first-year allowance of 50 per cent on most new plant and machinery investments that ordinarily qualify for special rate writing down allowances. Special rate investments include items with a ‘long life’ and improvements to integral features of a building.

To benefit from the relief the assets purchased must be new and not second hand or refurbished equipment.

The relief is only available to limited companies, but unincorporated businesses 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.

The AIA also remains available alongside the super-deduction for incorporated businesses, so businesses must review how they use these schemes to maximise the tax relief available.

Now is a great time for growing businesses to invest in new equipment and improvements as they look to benefit from the UK’s fast economic growth during the nation’s recovery.

To make sure that you are taking full advantage of the tax reliefs currently on offer you should speak to a specialist corporate tax adviser who can help you take full advantage of these additional savings. To find out how we can help with this, please contact our team today.

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