130% SUPER-DEDUCTION FOR INVESTING IN NEW PLANT CONTINUES

Andrew McQueen

Andrew McQueen

130% SUPER-DEDUCTION FOR INVESTING IN NEW PLANT CONTINUES


Many businesses may have been too short of cash to take advantage of the new super-deduction for investing in new plant in 2021 but may be more confident about investing in 2022.

This tax break, which started on 1st April 2021 and continues until 31st March 2023, allows companies to deduct 130% of the cost of new plant and machinery from their profits where that plant would normally be included in the general capital allowances pool.

If a company buys a new commercial vehicle costing £50,000 that means they can deduct £65,000 from trading profit saving £12,350 in corporation tax. Note that there would be a clawback charge on the disposal of the asset, which could be as much as 130% of the proceeds.

There is currently no financial limit on the amount that the company spends on new equipment qualifying for 130% tax relief.