The end of the ‘Super-Deduction’

With a key tax relief coming to an end on 31 March 2023, there is still time to take advantage so that your company doesn’t lose out on valuable tax reliefs.

What is the Super-deduction?

Introduced in 2021 to boost investment and kick-start the economy following the pandemic, the Super-deduction allows companies to cut their tax bill by 25p for every £1 that they invest in qualifying plant and machinery.

The deduction only applies to limited companies, and applies to assets that qualify for the Annual Investment Allowance (AIA). When a company calculates its tax bill, it has to ‘add back’ depreciation – which is not allowable for tax. Instead, they can deduct ‘Capital Allowances’, which are depreciation rates and allowances set by the UK Government.

Many assets qualify for the Annual Investment Allowance, which allows 100% of the cost of a new capital purchase to be deducted when calculating taxable profits. The Super-deduction allows for 130% of the cost to be deducted, resulting in a tax saving.

What assets qualify for the Super-deduction?

Most business assets are categorised as plant and machinery, including computer equipment, office equipment, vans and many other purchases of fixed assets that would ordinarily fall into the ‘Main rate’ for Capital Allowances.

Importantly, the equipment must be bought new and unused to qualify. Equipment received as a gift does not qualify.

Cars do not qualify for the AIA, even if they are used solely for business purposes, and they do not qualify for the Super-deduction either. 

Some assets will not qualify for the Super-deduction, but will importantly qualify for Special First Year Allowances, allowing 50% of the cost to be deducted when calculating taxable profits.

Is it too late to take advantage of the Super-deduction?

No! The Super-deduction will end on 31 March 2023, and any eligible purchases before this date can be claimed, even if the tax return for that period is not submitted before 31 March 2023.

If your company is thinking of buying new equipment in the next few months, it may be worth considering bringing this forward to before 31 March 2023.

Can Talking Numbers Accountancy & Bookkeeping help?

Yes! We can help you to navigate complex tax legislation and make sure that you are claiming all your eligible allowances and reliefs. Get in touch today for a free, no-obligation consultation.

The above article is for information only and should not be relied upon as tax advice.

How Else We Can Help

We offer a full selection of services for small and growing businesses! Learn more by selecting a service below:

Our Services for Small Businesses

Articles & Advice

Spring Budget 2024

Spring Budget 2024

The Chancellor of the Exchequer, Jeremy Hunt, delivered his budget statement in the House of Commons on 6th March 2024. This sets out the tax and spending plans for the coming year. We’ve summarised the key tax points below. Income tax The controversial “non-dom” tax...

The Side-Hustle Tax

The Side-Hustle Tax

What is the “side-hustle tax” and do I need to be worried about it? From 1 January 2024, online marketplace sites like eBay, Uber, Vinted, Airbnb and others are required to report their sellers’ sales details to HMRC. HMRC has always been able to request this data,...

Scottish Budget: 18th December 2023

Scottish Budget: 18th December 2023

The Scottish Government’s Finance Secretary, Shona Robison, set out her budget for 2024/25 on 18th December 2023. This was in the wake of the UK budget being announced on 22nd November 2023, where the Chancellor, Jeremy Hunt, announced a reduction in National...

If you’re ready to understand your numbers better and grow your business,
arrange your free, no-obligation consultation: