Super-deduction

The super-deduction allowance is a 130% first-year capital allowance for qualifying plant and machinery assets; and a 50% first year allowance for qualifying special rate assets.

These allowances give businesses investing in certain equipment a much higher tax deduction in the tax year of purchase than would otherwise occur. These allowances apply for capital investments made between 1 April 2021 and 31 March 2023.

Although not all business investments will qualify, new plant and machinery assets will be able to claim:

  • a 130% super-deduction capital allowance on qualifying plant and machinery investments

  • a 50% first-year allowance for qualifying special rate assets

This will allow companies to cut their tax bill by up to 25p for every £1 they invest, encouraging firms to invest in productivity-enhancing plant and machinery assets that will help them grow. 

Companies can claim in the period of investment:

  • a super deduction providing allowances of 130% on most new plant and machinery investments that could ordinarily qualify for 18% main rate writing down allowances 

  • a first-year allowance of 50% on most new plant and machinery investments that ordinarily qualify for 6% special rate writing-down allowances.

Capital investment must be in new and unused assets that qualify as main pool expenditure subject to some specific exclusions. This will include expenditure such as solar panels, tractors, lorries and vans, fire alarm systems, security systems, carpets, computer equipment and servers, office desks and furniture, refrigeration units and electric vehicle charging points. 

Find out more here.