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Super-deduction and special rate first year allowance

You are here: Home / Tax / Budget / Super-deduction and special rate first year allowance

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Key Points

  • Introduction of an enhanced superdeduction equal to 130% for expenditure on certain items of plant or machinery.
  • on qualifying expenditure on plant or machinery from 1 April 2021 to 31 March 2023.
  • if a company spends £1,000 on qualifying items of plant and machinery within the dedicated time period, it will be able to deduct £1,300 from taxable profits.
  • At present, the company may be able to claim the full amount as a deduction using the Annual Investment Allowance, so in effect, the company receives additional benefit of 30% of expenditure (equivalent to a cash tax benefit of 5.7% of the original expenditure).

Eligibility and other points

  • It is only available to companies within the charge to corporation tax.
  • It is not available for items with a long life (over 25 years), integral features within a building, or solar panels (i.e. special rate pool items).
  • It is not available for cars. The items must be new and unused.
  • If the item is subsequently disposed of, the full disposal proceeds may be brought into account as taxable income.

More information

Budget 2021: Documents

Explanatory Notes on the Super Deduction

Super-deduction_and_special_rate_first_year_Download

Filed Under: Budget, Covid-19, Tax

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