Capital Allowances Super Deduction


What is the new super deduction?

In his March 2021 Budget the Chancellor, Rishi Sunak, announced a major new tax incentive for businesses – the Capital Allowances “Super Deduction”.

From 1 April 2021 until 31 March 2023, businesses investing in qualifying new plant and machinery assets will be able to claim:

– a 130% super-deduction on qualifying plant and machinery investments
– a 50% first-year allowances for qualifying special rate assets (Integral Features)

In effect the super-deduction will allow companies to reduce their tax bill by up to 25p for every £1 they invest, making the UK capital allowances regime, amongst the most competitive in the world.

Add to this the current Annual Investment Allowance (AIA) at £1million until January 2022 and the Structures and Buildings Allowance (SBA) at 3% (for capital expenditure that doesn’t attract capital allowances) and surely there can never have been a better time for businesses to consider a capital spend.

The Government has regularly used capital allowances to stimulate the economy when economic growth is needed and now as we emerge from the global COVID-19 pandemic investment is seen as a critical element on the path to that economic growth.

With any capital projects the key to a successful “super deduction” claim is in the detail.

HMRC will expect to see correctly costed (or priced) claims being submitted taking into account not only the cost of the qualifying item, but also any associated building works in connection with the installation, along with a correct proportion of any preliminaries.

Once an accurate quantification has been reached, HMRC will then require the correct pooling of those qualifying assets into the main and special rate pools, alongside AIA & SBA calculations.

Here at Elect we are regulated by the RICS, with our multi-disciplined team in Tax & Quantity Surveying, we are able to provide you and your clients with a seamless end to end service meeting the exacting standards required by HMRC to secure you and your clients every £1 of tax relief that they are entitled to.

Speak to us to establish the best way we can work with you to secure you the maximum tax relief.

Please see below for the legislation behind this change: