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The UK's New Super-Deduction Tax Break

And what it means for your business ...

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Posted by Roger Eddowes on 15/03/2021 @ 8:00AM

The Government's new Super-Deduction tax break is designed to allow businesses large and small to claim 130% of what they spend on eligible new equipment against their taxable profits ...

When it comes to the UK's new Super Deduction, don't just jump in and start spending!

When it comes to the UK's new Super Deduction, don't just jump in and start spending!

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The scheme runs from the 1st of April 2021 until the 31st of March 2023. This means that any company investing in qualifying plant and machinery will be able to claim:

  • A 130% Super-Deduction capital allowance

  • A 50% first-year allowance for qualifying special rate assets

A business can cut its tax bill by up to 25p for every £1 they invest by making purchases and there are many assets that qualify for the UK's new Super-Deduction. These include, but are not limited to:

  • Solar panels

  • Computer equipment and servers

  • Tractors, lorries and vans

  • Ladders, drills and cranes

  • Office chairs and desks

  • Electric vehicle charge points

  • Refrigeration units

  • Compressors

  • Foundry equipment

The Chancellor has said he believes his new Super-Deduction Corporation Tax Relief will not only increase business spending, but increase overall investment as well. He believes that at its peak, the Super-Deduction should raise the level of business purchases by 10%, or roughly £20bn a year, according to the Office for Budget Responsibility (OBR).

One thing to be careful of is the disposal of that new asset before the end of the Super-Deduction scheme as it may end up costing you more in tax than you get deducted!

Thanks to the Super-Deduction, a purchase of £100,000 will give a corporation tax deduction of £130,000. The Corporation Tax Relief at 19% on that £130,000 will be £24,700 rather than the usual £19,000 when it falls within a company's annual investment allowance.

Certain purchases are excluded, so it's not possible to acquire assets such as company cars using the Super-Deduction scheme. You are going to need a solid purchasing strategy and good business planning, thorough record-keeping are going to be very important here if you want to take advantage of the scheme and not be penalised later on.

Ensure your plan is structured correctly, what you want to buy is eligible and that you can be sure you make the most of the tax savings covered by the Super Deduction scheme.

As always, my team and I are here to help put together your plan.

Until next time ...

Business Godparent


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About Roger Eddowes ...


Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.

Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.