In 2021, the government introduced a new temporary allowance to aid in the economic recovery from the COVID-19 epidemic. This temporary allowance is referred to as the ‘super-deduction’.
In simple terms, from 1 April 2021 until 31 March 2023, companies investing in qualifying new plant and machinery assets will be able to claim 130% of the cost of the asset against their taxable profits.
Example
A company purchases a laptop for £1,000. Spending £1,000 means that the company can deduct £1,300 (130% of the initial investment) against its taxable profits.
A company purchases office furniture for £600. Spending £600 means that the company can deduct £780 (130% of the initial investment) against its taxable profits.
Conditions
As with any tax relief, there are some conditions that must be met. These conditions are:
The super-deduction is only available to limited companies
The asset must be purchased between 1 April 2021 and 31 March 2023
The asset must be purchased new (second hand purchased assets do not qualify)
The asset must qualify as plant and machinery. Although there is no exhaustive list of plant and machinery assets, the kind of assets which qualify may include:
Office furniture (chairs, desks, etc.)
Computer equipment
Vans, tractors, and lorries (but not cars)
Electric vehicle charging points
Ladders, drills, cranes, and other construction-related tools
If you have any questions regarding the super-deduction, please do not hesitate to contact us.
Comments