You may have heard about a ‘super deduction’ for tax after the budget last week. This relates to the purchase of plant and machinery and the capital allowances (or tax deduction) that you can claim on these purchases. The idea being that you claim a deduction for tax of not just what you paid for it, but the cost uplifted by 30%. So if buy something for £1,000 then you will get a tax deduction of £1,300.

It is a great idea but, as with all tax, the devil is in the detail…..

• It will only apply to companies subject to corporation tax so not partnerships or sole traders.
• It is only for purchases between 1^st April 2021 and 31^st March 2023.
• It only applies to purchases that qualify as plant and machinery under the tax legislation.
• It can only apply to new and unused assets (i.e. not second hand).
• If you sell the asset you may have to pay the super deduction back.

So if you are a company and thinking of investing in some new plant and machinery that might qualify for this super-deduction then it might be worth putting off this investment until after the 1^st April 2021 so that you can make the most of this relief.

If you want to know more about this or would like to know if an investment in plant and machinery will qualify for this relief and what it will mean for you then please just get in touch.