What is the Super Deduction Scheme?

Annabel Barnes • 24 March 2022

In order to encourage businesses to invest and get the economy back up and running following the Coronavirus pandemic the government introduced an incentive called the Super Deduction Scheme. By making Capital Allowances more generous there’s a likelihood that more businesses will be tempted to invest in new plant and machinery, stimulating economic growth.

From 1st April 2021 until 31st March 2023 the Super Deduction Scheme will be available to eligible businesses who invest in qualifying plant and machinery. Businesses will be able to claim a:

Super Deduction of 130% on Capital Allowance
50% First Year Allowance for qualifying special rate assets
100% relief Annual Investment Allowance

The introduction of the Super Deduction Scheme means that businesses will be reducing their tax bills by 25p for every £1 they invest.

What are Capital Allowances?

When working out your taxable profits, Capital Allowances allow you to write off costs of capital assets against your taxable income by taking into account depreciation which would normally not be tax deductible.

The two main types of Capital Allowance are:

Writing Down Allowances (WDA) - covering most plant and machinery equipment
Structures & Buildings Allowances (SBA) - covering construction and renovation of non-residential buildings

What is classed as Plant & Machinery?

The types of assets which may qualify for the Super tax deduction are: but are not limited to;

Computer equipment
Lorries, vans and tractors
Solar panels
Drills, cranes and ladders
Compressors
Refrigeration units
Electrical vehicle charging points
Office furniture such as desks
Workshop equipment

For more information about the Super Deduction Scheme take a look at HMRC’s fact sheet which you can find here.

If you need further guidance and support with the Super Deduction Scheme then please get in touch.

Get in touch

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