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Michelle Monck

Consumer Finance Expert
Published: 08/06/2021
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Article written by Ultimate Finance, an asset finance and invoice finance lender.
John Farquharson, Head of Finance at Ultimate Finance explains how the Super-deduction capital allowance scheme works.

What is the Super-deduction capital allowance scheme?

Businesses planning to acquire plant and machinery between 1 April 2021 and March 2023 could claim the Super-deduction capital allowance to write off the cost of certain capital assets against taxable income. The Super-deduction increases the capital allowance from 100% to 130% on qualifying capital assets. The new scheme was announced in the April Budget as part of several Government measures to invest in the UK economy. The scheme encourages eligible firms to invest in capital assets that can improve their productivity and competitiveness.  This should also see demand for plant and machinery also increase.

Which businesses can participate in the Super-deduction capital allowance scheme?

It is only available to companies so sole traders and partnerships are not included in the scheme.

Which assets qualify for the scheme?

The assets must be a qualifying form of plant or machinery and must be bought new, not second hand. The assets must be used in the business and not leased or rented to customers. HMRC sees most tangible capital assets used by the businesses to be plant and machinery, examples include computer equipment and servers, company vehicles, such as tractors, lorries and vans, ladders (but not cars), office furniture, electric charging points, compressors, and refrigeration units. This is not an exhaustive list.

A secondhand asset does not qualify for the Super-deduction, but may still qualify for the Annual Investment Allowance (AIA) - this provides 100% relief for plant and machinery expenditure. This allowance is for plant and machinery acquired up to £1 million and is available until 31 December 2021.

How much can you save using Super-deduction capital allowance?

The Super-deduction capital allowance allows you an uplift of 130% of the purchase price of the asset. For example, if you buy an asset at £20,000, this increases by 130% to £26,000 and the deduction against tax is £4,940. Without the Super-deduction the standard allowance would have been a £3,800 reduction. The firm makes an additional saving of £1,140 against its tax liability.

Find out more about asset finance

Find out more about how asset finance works and how this could help you to purchase qualifying assets.

Get help with your business tax

Kellands Hale is the preferred independent financial adviser for Our visitors can speak to Kellands Hale for a free review of their own and their business’ tax affairs. (Minimum £100,000 in savings and investments). 

Find out more

It is recommended that you seek advice from a tax professional before making any decisions.


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