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Make the most of the super-deduction tax incentive on plant and machinery


If you are considering plant and machinery purchases for your company (this only applies to companies who pay corporation tax - not individuals, partnerships or LLPs), you can take advantage of the super-deduction tax incentive until March 2023.

What is the incentive?

For expenditure incurred from 1 April 2021 until the end of March 2023, companies can claim 130% capital allowances on qualifying plant and machinery investments.

For every pound a company invests, their taxes are cut by 24.7p.

Example

An example of the super-deduction is as follows:

  • A company incurring £1m of qualifying expenditure decides to claim the super-deduction

  • Spending £1m on qualifying investments will mean the company can deduct £1.3m (130% of the initial investment) in computing its taxable profits

  • Deducting £1.3m from taxable profits will save the company up to 19% of that – or £247,000 – on its corporation tax bill.

What classes as plant and machinery?

Most tangible capital assets used in the course of a business are considered plant and machinery for the purposes of claiming capital allowances.

There is not an exhaustive list of plant and machinery assets. The kinds of assets which may qualify include, but are not limited to:

  • Solar panels

  • Computer equipment and servers

  • Tractors, lorries, vans

  • Ladders, drills, cranes

  • Office chairs and desks,

  • Electric vehicle charge points

  • Refrigeration units

  • Compressors

  • Foundry equipment

The government factsheet on Super-Deduction can be found here.

Ask us…

There are exclusions that apply to the super-deduction, so for more information, or to check on eligibility of company purchases, please get in touch.