In the March 2021 budget, the government announced a new tax-break for limited companies that pay corporation tax. It was called Super-Deduction.
Super-deduction was brought in “to spur business investment, boost the UK’s post-pandemic economic recovery, and improve the country’s productivity levels”, explains Swoop UK, a credit broker who helps UK businesses to access business finance.
Super-deduction will be in force for 2 years, until the end of March 2023. In the government’s own words, “Super-deduction is a temporary allowance you can claim on the cost of qualifying plant and machinery”.
How can Super-Deduction help my business?
The way super-deduction works is that when you buy equipment you can claim 130% capital allowance. In other words, if you spent £1,000 on a new PC for the office, you could reduce your corporation tax bill as much as if you had spent £1,300! Which is pretty good news!
Not many businesses know about this tax relief, and it is only in place until the end of March 2023. With this in mind, if you need to buy some equipment at some point in the foreseeable future, it might be worth considering whether making the purchase before the end of March 2023 would make sense financially.
You’d need to make sure that you are eligible, which you can do by visiting the government website. If it’s not clear, then you can ask for further advice. But we do know that “plant and machinery that may qualify for the super-deduction includes (but is not limited to) machines such as computers….” (quote taken directly from the gov.uk website!). Equipment also includes new servers, NAS boxes and other IT equipment. And to claim these allowances, all of the following need to apply:
- your company is subject to Corporation Tax
- you incurred the expenditure on or after 1 April 2021, but before 1 April 2023
- you did not buy the plant and machinery due to a contract you entered into before 3 March 2021
If you need any new equipment, give us a call to get booked in before the deadline.