Skip to main content

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.




Share this article

Explore our Compliance services:

Compensation Schemes

Major energy users cannot afford to miss out on key savings from compensation schemes such as climate change agreements (CCA), Energy Intensive Industry discounts (EII), and the Min-Met CCL Exemption Scheme. Our experts are adept at securing qualification for these schemes – often where others have said it isn’t possible.

Discover more

Regulatory & Reporting Requirements

Nobody knows the regulatory landscape better than our specialist team. They are genuine experts, who take care over the details – when it comes to compliance that’s important and will ensure you will reap the optimum benefits.

Discover more

Silentnight Group

Envantage identified £375,000 of savings from the Energy Savings Opportunity Scheme for the Silentnight Group, following a comprehensive review of its operating facilities.

Discover more

Join our Knowledge Hub for access to exclusive content and industry insights from our team of carbon and business energy experts.

Sign up now