The super deduction is a time-limited capital allowance that gives businesses 130% first-year relief on qualifying plant and machinery investments. This allowance was introduced by the UK government in April 2021 as part of its economic response to the COVID-19 pandemic and expires at the end of March 2023. The super deduction can lead to significant savings for businesses, with up to £247 in corporation tax saved for every £1,000 invested.
To be eligible for the super deduction, a business must be a limited company and must invest in new plant and machinery for direct use within the business, not for leasing or renting out to customers. Most tangible assets that would normally qualify for the main rate pool are considered acceptable for the super deduction, including computer equipment, office furniture, and electric vehicle charge points. Cars, even if solely for business use, are a notable exception.
It is important for businesses to plan ahead to take advantage of the super deduction, especially considering the timing of the purchase and the end of the accounting year. With only a few months remaining until the allowance expires, businesses should start their planning process as soon as possible. Although, there are other capital allowances available even if the super deduction deadline is missed or the purchases don’t qualify.
In conclusion, the super deduction is a valuable opportunity for businesses to invest in qualifying assets and save on corporation tax. However, the time-limited nature of the allowance means that businesses must act quickly to take advantage of this generous relief.
For more information on capital allowances and how to maximize your savings, be sure to check out our other blog post