Time is running out – to qualify for the Super Deduction Scheme, the asset needs to be on site by 31 March 2023, therefore lead times of equipment need to be taken into consideration. For those looking to invest in plant and machinery and make a significant impact on their tax liability, this is an opportunity too good to miss.

To recap, from 1 April 2021 until 31 March 2023, businesses investing in qualifying plant and machinery assets will benefit from up to 130% first-year capital allowance, under the Government’s Super Deduction Scheme.

This scheme allows businesses to deduct the full value of qualifying assets from profits before tax and to do so in the year assets are purchased rather than over several years, therefore reducing the business’ tax liability in that year.

For example, under the new rules: if your taxable profits pre-investments are £200,000, and you invest £100,000 in qualifying new machinery, you will be entitled to claim in that year a capital allowance of £130,000.  The Corporation Tax rate is currently 19% meaning the tax saving on that £130,000 will be £24,700 rather than £19,000 when it falls within a company’s annual investment allowance.

Furthermore, there is no limit or cap on the amount of capital investment that can qualify for the super deduction.  This makes the scheme particularly beneficial when the level of investment would have exceeded the annual investment allowance in previous years, as in this instance capital allowances could only be claimed over several years rather than all in the year of purchase.

The scheme works alongside a number of finance options, although these will have to meet additional conditions to qualify for the super-deduction.

For more information on this allowance please refer to the HM Revenue & Customs website

Please note, it is also important to seek advice on the impacts and benefits for your specific business from your accountant or business adviser before undertaking any machinery investment under this scheme.


Disclaimer.  These examples are for illustrative purposes only and you should always check with your accountant regarding your particular business situation and any tax benefits that would apply.

To discuss any potential machinery requirements please get in touch with our sales team on [email protected]

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