The Budget on the 3rd of March 2021 brought some good news by introducing a temporary increase in reliefs for expenditure on plant and machinery. Companies within the charge to Corporation Tax who invest in plant and machinery on or after 1 April 2021 and up to and including 31 March 2023 can claim:

  • a 130% super-deduction capital allowance on qualifying plant and machinery investments
  • a 50% first-year allowance for qualifying special rate assets

This deduction will allow companies to cut their tax bill by up to 25p for every £1 they invest. This means the UK capital allowances regime is amongst the world’s most competitive meaning there has never been a better time to invest your business.  Experts believe this should act as a major investment catalyst and the government is hoping it will will boost investment by £20bn a year.

Chancellor Rishi Sunak said: “With the lowest corporation tax in the G7, we need to do even more to encourage businesses to invest – for decades we have lagged behind our international peers. We need to unlock cash reserves so today I can announce the super-deduction. For the next two years when companies invest, they can reduce their tax bill with super deduction by 130% of the cost.”

For more information click here: https://www.gov.uk/guidance/super-deduction