From 1 April 2021 until 31 March 2023 companies investing in qualifying new plant and machinery assets will be able to claim the following:
- 130% super-deduction capital allowance on qualifying plant and machinery investments
- 50% first-year allowance for qualifying special rate assets.
Businesses should look to make the most of these incentives announced which aim to encourage businesses to invest in productivity-enhancing plant and machinery assets tohelp them grow.
Both of the above gain businesses a much higher tax deduction in the tax year or purchase than would otherwise normally occur. These allowances will run alongside the annual investment allowance currently set at £1m which already gives 100% relief on qualifying plant and machinery.
However please note that the super deduction is only available to companies subject to corporation tax not individuals partnerships or LLPs.
The table below illustrates the effective rates of relief for the different claims:
| Asset class | Capital Allowance claim | Asset type | Capital Allowance rate | Effective relief of cost in year 1 for company |
| Main plant and machinery | Super deduction | New | 130% | 24.7% |
| AIA (max £1m) | All | 100% | 19% | |
| Main pool | Second hand | 18% | 3.42% | |
| Special Rate (generally Long Life assets or integral features) | AIA (max £1m) | All | 100% | 19% |
| SR deduction | New | 50% | 9.5% | |
| Pool | Second hand | 6% | 1.14% |
It is important to consider thiswhen you are planning on purchasing qualifying plant and machinery.
Our business services team is available should you have any questions or want to discuss future plans for your business while considering how to optimise tax efficiencies. Please contact us on 01223 810100 or email help@cklg.co.uk
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