{"id":762,"date":"2022-06-15T17:55:54","date_gmt":"2022-06-15T16:55:54","guid":{"rendered":"https:\/\/wearesapphire.co.uk\/\/accounting\/?post_type=insights&p=762"},"modified":"2024-04-02T17:56:26","modified_gmt":"2024-04-02T16:56:26","slug":"have-you-heard-about-the-super-deduction-tax-yet","status":"publish","type":"insights","link":"https:\/\/wearesapphire.co.uk\/accounting\/insights\/have-you-heard-about-the-super-deduction-tax-yet\/","title":{"rendered":"Have you heard about the Super-Deduction Tax yet?"},"content":{"rendered":"

The Government has offered unprecedented support for businesses during Covid. Even so, pandemic-related economic shocks and the accompanying uncertainty have chilled business investment. Therefore, in the 2021 budget, the Government introduced a super deduction tax for businesses.<\/p>\n

Until 31 March 2023, companies investing in qualifying new plant and machinery assets will be able to claim a 130% super-deduction capital allowance on qualifying plant and machinery investments, and a 50% first-year allowance for qualifying special rate assets.<\/p>\n

The super-deduction will allow companies to cut their tax bill by up to 25p for every \u00a31 they invest, ensuring the UK capital allowances regime is amongst the world\u2019s most competitive.<\/p>\n

This super-deduction will encourage firms to invest in productivity-enhancing plant and machinery assets that will help them grow, and to make those investments now.<\/p>\n

Why is the Government introducing a super-deduction tax?<\/strong><\/h3>\n

Much of the UK\u2019s productivity gap with competitors is attributable to our historically low levels of business investment compared to our peers. Weak business investment has played a significant role in the slowdown of productivity growth since 2008. Making capital allowances more generous works to stimulate business investment. As a result, these measures can promote economic growth and counter business cycles. The super-deduction will give companies a strong incentive to make additional investments, and to bring planned investments forward.<\/p>\n

What types of businesses will benefit?<\/strong><\/h3>\n

Companies that pay corporation tax and invest in qualifying plant or machinery from 1 April 2021 until 31 March 2023.<\/p>\n

Sole traders and partnerships, including limited liability partnerships, cannot benefit under this new rule and will continue to be able to claim the capital allowances at 100% of up to \u00a31m under the annual investment allowance.<\/p>\n

What assets qualify for this tax allowance?<\/strong><\/h3>\n

New and unused plant & machinery assets. These can be funded by a Hire Purchase agreement, subject to meeting additional conditions. However, leased equipment does not qualify under the scheme, as ownership of the asset forms part of the qualification criteria.<\/p>\n

Most tangible capital assets used in the course of a business are considered plant and machinery for the purposes of claiming capital allowances. The kinds of assets which may qualify for either the super-deduction or the 50% FYA include, but are not limited to:<\/p>\n