{"id":2384,"date":"2021-03-22T10:39:44","date_gmt":"2021-03-22T10:39:44","guid":{"rendered":"https:\/\/kirkwoodwilson.co.uk\/?p=2384"},"modified":"2024-01-18T20:17:37","modified_gmt":"2024-01-18T20:17:37","slug":"super-deduction-scheme","status":"publish","type":"post","link":"https:\/\/kirkwoodwilson.co.uk\/super-deduction-scheme\/","title":{"rendered":"130% Capital Allowances with Super Deduction Scheme"},"content":{"rendered":"\r\n

On Wednesday 3rd March 2021, <\/em>Chancellor of the Exchequer Rishi Sunak announced the <\/em>2021 budget<\/em><\/a>. This budget brought with it record-breaking changes to the way that businesses pay their taxes, such as the introduction of the 130% super deduction scheme on any plant and machinery new investments until March 2023. Read on to find out more about super deductions and how you can benefit.\u00a0<\/em><\/p>\r\n\r\n\r\n\r\n

Super-deductions<\/h2>\r\n\r\n\r\n\r\n

Perhaps the biggest announcement to have come out of the 2021 Budget, announced in March 2021, is the impressive increase in the super-deduction on taxable allowances. This means that for expenditure business owners make between 1st April 2021 and 31st March 2023, companies can claim 130% capital allowances on qualifying plant and machinery investments.\u00a0\u00a0<\/p>\r\n\r\n\r\n\r\n

Under the super-deduction scheme<\/a>, for every pound spent or invested by a company in their own resources, their taxes are then cut up to 25p.\u00a0<\/p>\r\n\r\n\r\n\r\n

Rishi Sunak announced this change to the way in which tax works for businesses in order to make the UK\u2019s capital allowance regime much more internationally competitive.\u00a0<\/p>\r\n\r\n\r\n\r\n

Why has the Government introduced Super-Deductions?<\/h3>\r\n\r\n\r\n\r\n

Since the start of the COVID-19 pandemic, business investments have fallen dramatically by 11.6^ between Q3 2019 and Q3 2020. This means that a large portion of UK based businesses have opted to not invest in new machinery or transportation resources during the pandemic. By working to make capital allowances, the Government hopes that this will work to stimulate business investment, which will promote economic growth and counter business cycles.\u00a0<\/p>\r\n\r\n\r\n\r\n

Super-Deductions will give companies a strong incentive to make additional investments and bring planned investments forward.\u00a0<\/p>\r\n\r\n\r\n\r\n

What are capital allowances?<\/h2>\r\n\r\n\r\n\r\n

Capital allowances allow tax paying businesses to write off the cost of certain capital assets against taxable income. The 130% Super-Deduction and 50% first-year allowance are generous ways for businesses to benefit from capital tax allowances for investments into plant and machinery assets.\u00a0<\/p>\r\n\r\n\r\n\r\n

Investing in new plant and machinery assets, tax paying businesses will be able to lower their corporation tax bills.\u00a0<\/p>\r\n\r\n\r\n\r\n

What is classified as plant and machinery?<\/h2>\r\n\r\n\r\n\r\n

Most tangible assets used in the course of a businesses lifespan are considered plant and machinery for the purposes of claiming capital allowances. So, whilst there is not an exhaustive and explicit definition of plant and machinery investment, these assets can generally be defined as:\u00a0<\/p>\r\n\r\n\r\n\r\n