Capital Allowance Super-Deduction

Capital Allowance Super-Deduction

The Treasury has put forward an unprecedented level of support to UK businesses in their most recent budget.  The introduction of the new Capital Allowance Super Deduction will hopefully give companies a strong incentive to make additional investments of plant and machinery to help with the core operation of their business and hopefully growth within their sector (below gives a definition on qualifying expenditure relating to P&M).

This new deduction will start on transactions from the 1st of April 2021 and will run until the end of March 2023, allowing companies to claim 130% capital allowances on qualifying plant and machinery investments.

• Under the super-deduction, for every pound a company invests, their taxes are cut by up to 25p.

However there is a caveat to this new Super Deduction, Only landlords that that use the plant & machinery directly in the operation of their business or trade are entitled to claim for example, FHL owners, trades, office owners that function with those offices etc.

The new Capital Allowances offer

As a result of the recent Budgets, we have listed in order of announcements the new Capital Allowance measures:-

Annual Investment Allowance (AIA) providing 100% relief for plant and machinery investments up to its highest ever £1 million thresholds, until 31 December 2021.

• The Capital Allowance super-deduction – which offers 130% first-year relief for companies on qualifying main rate plant and machinery investments until 31st of March 2023.

• A 50% first-year allowance (FYA) for special rate (including long life) assets until 31 March 2023.

• Within Freeport tax sites, companies can access new Enhanced Capital Allowances (ECA), meaning companies, individuals, and partnerships can benefit from an enhanced level of Structures & Buildings Allowance (SBA) for investments until the 30th of September 2026.

For more details on this along with other budget related material please read the Budget here.

What qualifies in embedded Plant and Machinery?

In short anything that is screwed glued or embedded to the structure of the building such as electrical cabling, lights, heating, hot water units, lifts, AC etc. To find out more regarding your entitlement to Capital Allowances please get in touch! alternatively why no try out our Capital Allowance calculator.

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