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The super-deduction: time to invest in plant and machinery?

The super-deduction: time to invest in plant and machinery?

The super-deduction: time to invest in plant and machinery?

Posted: 26/03/2021

In last week’s Budget, Chancellor Rishi Sunak announced a new ‘super-deduction’ for companies that invest in qualifying new plant and machinery between 1 April 2021 and 31 March 2023. But what does that mean in practice? Put simply, for every pound a company invests, their taxes will be cut by up to 25p.

Significant new capital allowances

The super-deduction means that a company can claim allowances of 130% on most new plant and machinery investments ordinarily qualify for 18% main rate writing down allowances

In addition to the super-deduction, businesses will now benefit from a number of new tax reliefs:

  • A first-year allowance of 50% on most new plant and machinery investments that ordinarily qualify for 6% special rate writing down allowances, until 31 March 2023
  • Annual Investment Allowance (AIA) providing 100% relief for plant and machinery investments up to £1 million, until 31 December 2021
  • Within Freeport tax sites, companies can access new Enhanced Capital Allowances (ECA+)
  • Companies, individuals and partnerships can benefit from an increased level of Structures & Buildings Allowance (SBA+), until 30 September 2026.

Read the full super-deduction factsheet here

Van benefit charge nil-rating for zero-emission vans

From 6 April 2021, a nil rate of tax applies to zero-emission* vans within the van benefit charge. In 2020/21 such vans have a van benefit charge at 80% of the standard flat rate of £3,490.

Next steps

If you would like to discuss your plans to invest in plant and machinery or advice on any other tax planning matter, please get in touch. 

*A zero-emission van is a van which cannot in any circumstances emit CO2 emissions when driven.