Super Deduction Tax

Is your business maximising the new Super-Deduction Tax Allowance?

Cut your business tax bill
by 130% of the cost of your
investments in most new
plant and machinery.

Branded the ‘biggest business tax cut in modern British history‘ by Chancellor Rishi Sunak, the new Super-Deduction Tax Allowance announced in the Spring Budget 2021 allows businesses to reduce their tax bill by 130% of the cost of qualifying new investments in plant and machinery.

This means that from 1 April 2021 until 31 March 2023, companies investing in equipment, plant and machinery assets will be able to claim up to 25p for every £1 they invest.

For example, an investment of £100,000 in new equipment will result in a Super-Deduction of £130,000 against taxable profits. In this example, applying the current corporation tax rate of 19%, the company would achieve a substantial saving of £24,700.*

*Example provided for illustrative purposes only and does not provide a guarantee of acceptance for asset finance with Propel.

What types of businesses will benefit?

Companies that pay corporation tax and invest in qualifying plant or machinery from 1 April 2021 until 31 March 2023. Sole traders and partnerships, including limited liability partnerships, cannot benefit under this new rule and will continue to be able to claim the capital allowances at 100% of up to £1m under the annual investment allowance.

What assets qualify for this tax allowance?

New and unused plant & machinery assets. These can be funded by a Hire Purchase agreement, subject to meeting additional conditions. However, leased equipment does not qualify under the scheme, as ownership of the asset forms part of the qualification criteria.


Eligible Assets

Including, but not limited to:

IT hardware and software

Trucks and vans (not cars)

Agricultural machinery

Construction plant and machinery, including cranes and diggers

CNC & other manufacturing and engineering equipment

Office furniture

Solar panels

Electric vehicle charge points

Refrigeration units

Compressors

Ineligible Assets

Used or second hand assets

Assets subject to a lease

Cars

Motorbikes

Structures and buildings

Watch Rishi Explain The Super Deduction here:

See the Super-deduction factsheet (PDF, 151KB, 3 pages) for more information.

To find out more about the Super-Deduction, please click on the following link:

Information correct as of 26/04/2021

Propel does not provide taxation or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, taxation or accounting advice.