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Super Deductions

Super Deductions

What is a super deduction?

The super deduction allows companies to claim a 130% first year allowance (FYA) for investment incurred on ‘main pool’ items of plant and machinery acquired in the period between 1 April 2021 and 31 March 2023. This includes the items of plant and machinery like manufacturing equipment, machines and computers, but it also extends to items of main pool plant and machinery that are fixtures in properties.

New 50% FYA

Businesses are also able to benefit from a 50% FYA for expenditure incurred on special rate pool items of plant or machinery, which includes integral features, solar panels and thermal insulation.

Points to note

  • The 130% super deduction and 50% FYA are only available for plant and machinery that is new and unused.
  • Neither new allowance applies to assets purchased second-hand.
  • Relief is time apportioned for accounting periods that straddle 1 April 2021 and 31 March 2023.

Exclusions

Both the super deduction and the 50% FYA for special rate pool plant and machinery are only available to companies, so sole traders, partnerships and LLPs do not qualify. These reliefs are also only available for contracts entered into after 3 March 2021 so projects that have already been committed to before or during the course of the pandemic, will not qualify.

Not for landlords

The measures are not available to landlords investing in the construction of new property or the refurbishment of existing premises.

Not for cars

Long-life assets and cars are also excluded, but vehicles not deemed to be cars (vans, motorbikes etc used for trading purposes) are within the scope of the measure.

When will it end?

The measures only apply to expenditure incurred from 1 April 2021 until 31 March 2023 so companies will only receive the FYAs during the time when the 19% corporation tax rate applies. 

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