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What is the Super Tax Deduction?
The Super Tax Deduction is a UK government scheme that offers companies the ability to claim 130% capital allowances on investments made on qualifying plant and machinery in addition to three other Capital Allowance measures including the new 50% First-Year Allowance, the Annual Investment allowance and the Structures and Building allowance.
These schemes can support your plans to upgrade your office space and key technology that supports your operations. With the changes in the ways we work having shifted since the pandemic hit, there really hasn’t been a better time to consider upgrading your office from an operational, cultural, and financial point of view.
130% Super Deduction explained
When we look at the Super Tax Deduction of 130% capital allowance this translates to every £1 a company invests (on qualifying items) their taxes are reduced by as much as 25p.
So what items qualify as part of the 130% Capital allowance Super deduction I hear you cry? Well, let’s look more closely.
You can claim on what is defined as plant and machinery investments, now that isn’t aloe vera plants scattered around your office, although there are huge benefits to that (read our blog on aloe vera plants in the office) these are tangible assets used by the company to facilitate its continued operation (that does not include stock, or assets that are sold. So for instance a computer would be an eligible item, an item of stock that you would sell is not.
Please be aware that there are nuances to this description, we advise using the .gov website for definitions and clarifications on eligible assets. Please click here to visit the .gov website.
What assets are eligible under the Super Tax Deduction?
Eligible office based items:
+ Office Furniture
+ Carpet tiles
+ Communication systems
+ Computer equipment
+ Security Systems
+ Demountable Partitions
+ Sanitary Fixtures
+ Kitchens & Toilets
Other non-office eligible items:
+ Solar Panels
+ Tractors, Vans
+ EV Charging points
+ Refrigeration units
+ Compressors
+ Foundry equipment
+ Ladders, Drills etc.
What kind of savings can your business expect?
For example; a company purchases £100,000 worth of qualifying super deduction assets.
This means the company can deduct £130,000 (130%, we like to keep the maths simple) from its taxable profits.
Deducting that £130,000 will save up to 19% on the companies corporation tax bill which equates to £24,700 in this example.
Sum 100,000 x 130% x 19% = £24,700 tax saving
How long is this scheme available?
The 130% Super tax deduction came into effect on the 1st April 2021 and is set to run until the 31st March 2023, and is available on new assets purchased within the qualifying period on qualifying assets.
- 50% first-year allowance is available until 31st March 2023
- Annual Investment Allowance is available until 31st December 2021
- Structures & Buildings Allowance & the Enhanced Capital Allowances is available until 30th September 2026
Can I use the super-deduction to buy used equipment?
Unfortunately, the answer is no, the super deduction applies to new items only.
Is every company eligible?
No, not all companies are eligible. The super deduction and other stimulus measures only apply to companies who pay corporation tax. LLP’s, Individuals and Partnerships cannot benefit from these allowances.
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Testimonials
"The team at Dale were incredibly
efficient, friendly and helpful, and
we couldn’t recommend them more
highly.”
efficient, friendly and helpful, and
we couldn’t recommend them more
highly.”
Gavin Whiley
Managing Director at Havwoods Designer
"Our new office will help us grow our
business further, attract Bradford’s
top talent and enhance our team’s
wellbeing"
business further, attract Bradford’s
top talent and enhance our team’s
wellbeing"
Victoria Davey
Gordons Partner and Head of Operations