Don’t miss out on the Super-Deduction

By Heather Bright, Tax Partner at Moore Thompson

Farmers and agricultural sector firms are being urged not to miss out on the super-deduction which finishes at the end of March 2023.

Using this measure, companies can claim a super-deduction providing an allowance of 130 per cent on most new plant and machinery investments that ordinarily qualify for main rate writing down allowances.

In effect, this capital allowance ensures that for every pound a company spends, their tax liabilities can be cut by up to 25p.

Plant and machinery consist of any form of ‘tangible’ asset used in the day-to-day running of a business. Some examples are:

  • Ladders, drills, cranes
  • Office furniture
  • Refrigeration units
  • Electric Vehicle charge points
  • Compressors
  • Foundry Equipment

Certain expenditure is excluded, for example, the acquisition of company cars. To benefit from the relief the assets purchased must also be new and not second-hand or refurbished equipment.

An example of a company making use of the super-deduction would be as follows:

  • A company incurring £1 million of qualifying investments decides to claim the super-deduction
  • Spending £1m on qualifying investments will mean the company can deduct £1.3 million (130 per cent of the initial investment) in working out its taxable profits
  • Deducting – £1.3 million from its taxable profits will save the company up to 19 per cent of that – or £247,000 on its Corporation Tax Bill.

    Want to know more about how the Super-Deduction could work for your business?

To find out how we can help you, please contact us.