In his Budget speech, Chancellor Rishi Sunak announced a new ‘super-deduction’ for companies that invest in qualifying new plant and machinery between 1 April 2021 and 31 March 2023. But what does that mean in practice? Put simply, for every pound a company invests, their taxes will be cut by up to 25p.
Significant new capital allowances
The super-deduction means that a company can claim allowances of 130% on most new plant and machinery investments ordinarily qualify for 18% main rate writing down allowances
In addition to the super-deduction, businesses will now benefit from a number of new tax reliefs:
- A first-year allowance of 50% on most new plant and machinery investments that ordinarily qualify for 6% special rate writing down allowances, until 31 March 2023
- Annual Investment Allowance (AIA) providing 100% relief for plant and machinery investments up to £1 million, until 31 December 2021
- Within Freeport tax sites, companies can access new Enhanced Capital Allowances (ECA+)
- Companies, individuals and partnerships can benefit from an increased level of Structures & Buildings Allowance (SBA+), until 30 September 2026.
Read the full super-deduction factsheet here
Van benefit charge nil-rating for zero-emission vans
From 6 April 2021, a nil rate of tax applies to zero-emission* vans within the van benefit charge. In 2020/21 such vans have a van benefit charge at 80% of the standard flat rate of £3,490.
Next steps
If you would like to discuss your plans to invest in plant and machinery or advice on any other tax planning matter, please get in touch. Contact your local office or enquire online.
*A zero-emission van is a van which cannot in any circumstances emit CO2 emissions when driven.