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Asset purchasing

Using the new super-deduction to grow your business

What is the super-deduction?

To help stimulate business investment and promote economic growth and recovery from the pandemic, in the 2021 Spring Budget, the Chancellor announced the introduction of temporarily increased tax reliefs for the purchase of qualifying assets.

From 1 April 2021 until 31 March 2023, companies investing in qualifying new plant and machinery assets will be able to offset against taxable profits:

  • a 130% super-deduction first year capital allowance on qualifying plant and machinery investments
  • a 50% first year allowance for qualifying special rate assets

The super-deduction will allow companies to cut their tax bill by up to 25p for every £1 they invest. This provides significantly faster tax relief for qualifying investments, helping businesses to invest and grow.

Who can participate?

Only companies who pay corporation tax can take advantage of this tax incentive. However, sole traders and partnerships can look to still take advantage of the Annual Investment Allowance which is currently set at £1 million and is in place until 31st December 2021.

What expenditure qualifies?

Expenditure must be on new and unused plant and machinery and expenditure needs to be incurred on or after 1 April 2021, but before 1 April 2023. Assets can be funded via Hire Purchase finance, but cannot be leased.

Most tangible capital assets used in the course of a business are considered plant and machinery for the purposes of claiming capital allowances. There is not an exhaustive list of plant and machinery assets, eligible assets he kinds of assets which may qualify for either the super-deduction or the 50% FYA include, but are not limited to:

  • Vans, Lorries, Trailers
  • Cranes, diggers, excavators
  • Production equipment, robotic arms
  • Tractors, combine harvesters, crop sprayers
  • Computer Equipment and Servers
  • Solar panels
  • Electrics vehicle charging points

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Learn more about the super-deduction

The super-deduction is designed to help businesses increase their business investment in productive assets, creating the most competitive capital allowances regime in the OECD. To learn more visit the government website.

For specific tax advice, please speak to your accountant.

Super-deduction fact sheet

We've put together a fact sheet that explains the government’s new super-deduction tax break.

Our fact sheet rounds-up the key tax incentives available to businesses investing in plant and machinery.