Budget 2021: Plant and machinery super deduction for companies

In addition to the annual investment allowance being frozen at £1,000,000 for spend on plant and machinery incurred to 31 December 2021, the Government have today announced a new super deduction. 

From 1 April 2021 until 31 March 2023, companies investing in qualifying new plant and machinery will benefit from an 130% first-year capital allowance for those assets which would ordinarily qualify for the 18% main pool writing down allowance.  This means if you bought some new equipment for £10,000, you would receive a tax deduction of £13,000 in relation to this spend which is more generous than the annual investment allowance that currently gives an 100% deduction on such spend.

In addition, there will also be a 50% first year allowance on those plant and machinery items which would normally qualify for the 6% special rate writing down allowance.  It is likely that this relief would only be beneficial should the company have maximised its annual investment allowance in the period. 

These new reliefs are only available to companies and there are no caps on the amount of relief available.

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