From 1st April 2021 until 31st March 2023, businesses investing in qualifying new plant and machinery assets will be able to claim a 130% super-deduction capital allowance on their investments. Furthermore, there is also a 50% first-year allowance for qualifying special rate assets.

John Mulheron, Director at CMF Capital, said, “The super-deduction will allow companies to cut their tax bill by up to 25p for every £1 they invest. The government’s announcement further ensures the UK capital allowances regime is amongst the world’s most competitive.

The government have stated that since the COVID-19 pandemic, business investment has continued to fall. It is undoubtedly a positive sign that the government are taking the necessary steps towards incentivising business investment. Making more generous capital allowances stimulates business investment, which in turn can promote economic growth. 

The super-deduction allows companies to offset the total cost of new qualifying equipment against tax over the next two years. This will be particularly beneficial for the retail trade who are having to adapt exponentially due to the change in consumer purchasing behaviour, forcing factories and warehouses to modernise and adapt to the change.” 

Retailers and manufacturers who are able to make use of the super-deduction will be able to reduce their tax bill by up to 25p for every £1 they invest in qualifying assets made before March 31st 2023, giving them an incentive to make additional investments or to expedite planned investments. 

Mulheron continues, “As with any investment, you must follow HMRC’s rules to ensure that you qualify. The super-deduction would be covered by HMRC’s broad anti-avoidance rule, meaning any allowances claimed artificially will be disallowed.”

There isn’t currently a comprehensive list of the exact plant and machinery assets that would qualify. It is thought that most tangible assets used for the purpose of business should be eligible for some form of capital allowance. From IT equipment to renewable energy assets, vehicle fleets to robotics. 

If you would like to discuss how your business could benefit from the new super-deductions initiatives, the CMF Capital team is on hand to offer their advice and guidance.