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Super-deduction: HM Treasury introduces a new investment incentive in the 2021 Budget


Businesses can claim 130% capital allowances on qualifying plant and machinery investments between April 2021 and March 2023. This cuts taxes by up to 25p for every £1 spent.

To encourage business investment, which has fallen from already-low levels through the Covid pandemic, Rishi Sunak announced this £25bn measure of relief. It’s hoped the incentive will kick-start capital expenditure to boost UK productivity and international competitiveness.

Why is a super-deduction being introduced?

Business investment has fallen by 11.6% between Q3 2019 and Q3 2020, from levels which were already low. Our business investment in the UK can be traced as a reason for the productivity gap with our main international competitors, and productivity growth in the UK has been slower than in many other countries.

The super-deduction is aimed at giving a strong incentive to make additional investments and to bring planned investments forward. This should promote economic growth.

How does the super-deduction work for business?

The super-deduction offers 130% first-year relief on qualifying main rate plant and machinery investments from 1st April 2021 until 31st March 2023. For most business equipment this will mean that for every £100,000 spent the corporation tax deduction will be £130,000.

Energy efficient investments

With corporation tax relief at 19%, that is £24,700 compared to £19,000 without the new scheme or 18% of the cost per annum. This incentive is a substantial increase for the two year period.

If your business is considering capital expenditure, either as part of a drive to improve energy efficiency or for any other reasons, the super-deduction may be the incentive you need to accelerate your investment.

If you are thinking about investigating energy-efficient investments, contact our team of experts or call us on 0161 448 7722 today.




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