Super deduction and Special rate assets

Super Deduction

April 8, 2021 10:12 am Published by

What is the ‘Super Deduction’?

The super deduction in a nutshell: a new 130% first-year capital allowance for qualifying plant and machinery assets; and a 50% first-year allowance (FYA) for qualifying special rate assets.

The super deduction offers a 130% first-year relief on qualifying main rate plant and machinery investments from April 1 2021 until March 31 2023 for companies and a 50% first-year allowance for qualifying special rate assets. It will allow companies to cut their tax bill by up to 25p for each £1 they invest. This will run from the 1st of April 2021 until the end of March 2023.

What qualifies as ‘Plant Machinery’?

On the UK government’s website, the kinds of assets which may qualify for either the super-deduction or the 50% FYA include, but are not limited to:

  • solar panels
  • computer equipment and servers
  • Ladders, drills, cranes
  • Tractors lorries, vans
  • Office chairs/desks
  • Charge points for electric vehicles
  • refrigeration units
  • foundry equipment (eg; melting furnaces, ladles, forklifts, cranes, conveyors, and transfer vessels.)
  • Compressors

However, to qualify, these assets must be new and unused.

So, what are the ‘Special Rate Assets’?

  • Air-conditioning and air-cooling systems
  • Hot and cold-water systems
  • Thermal insulation of buildings
  • External solar shading
  • Electrical systems, including lighting systems
  • Lifts, escalators and moving walkways
  • Space and water heating systems

These are sometimes classified as ‘long life assets’. Therefore, these assets will qualify for the 50% deduction.

To conclude: 

If you think that the super deduction could be good for your business, please give us a call on 01179 902218 or email us at hello@spectrum-accountancy.co.uk to discuss about the super deduction, how your business could benefit from it and if you have any questions.

 

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This post was written by Daisy Vowles

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