Super-deductions ExplainedBudget 2021

With Franks Accountants

As a result of measures announced in the new budget, there are some significant savings and incentives with regards to capital allowances. If you’re looking to invest in new equipment, then ensuring you take advantage of these measures and purchase within this window is obviously advantageous. In this article, we explain what the Super-deductions are and how you can benefit.

Capital Investments

The Chancellor has stated that companies investing in plant and machinery in the period from 1 April 2021 to 31 March 2023 will be able to benefit from enhanced tax relief.

In this period, companies can claim 130% tax relief on qualifying plant and machinery investments.

Under the super-deduction, for every pound a company invests, their taxes are cut by up to


Planet & Machinery – What is this?

Plant and machinery is the category used to describe capital assets. Most tangible capital assets used in the course of a business are categorised here for the purposes of claiming capital allowances.

Here’s an example of some of the assets in this category, so you can better align with your own capital expenditure. It is not an exhaustive list, but should give you a better idea:

  • Industrial equipment

  • Construction machinery

  • Computer equipment and servers

  • Tractors, lorries, vans

  • Ladders, drills & tools

  • Office chairs and desks

  • Fixtures and fittings

  • Electric vehicles and charge points

Example scenario

If a company purchased a new machine for £10,000 during April 2021, based on the new 130% allowance, £13,000 could be deducted from the company’s profits.

This means, at the present 19% rate of corporation tax this would bring a saving of £2,470 in terms of corporation tax due.

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