Announced in the March 2021 budget was the introduction of super-deduction as a form of capital tax allowance for the purchase of new plant and machinery acquired for business use by UK limited companies.

There are now 3 capital allowances are available:

  • Writing Down Allowance (WDA)

This is a permanent scheme for claiming capital allowances. You are able to write off 100% of the asset price for tax purposes over the period it is being used.

However the distinctive difference with WDA is that you are only able to claim 18% of the asset price in each year of spend.

There is no expenditure limit with the Writing Down Allowance and this is also available to all business structures (Sole Traders, Limited Companies, Partnerships),

  • Annual Investment Allowance (AIA)

In 2006 the AIA was introduced to allow businesses to acquire a certain amount of capital equipment each year and claim the full allowance in the year it was purchased.

The expenditure limit as of 2021 is £1,000,000 and is available to all business structures as WDA is.

  • Super-Deduction

As of 1st April 2021, the super-deduction which is the most attractive capital allowance schemes of them all, will be introduced to increase the investment in capital equipment.

What makes the super-deduction so attractive is the ability to claim 130% of the asset price. There is no expenditure limit on this, however, it is only available on new equipment and unlike all business structures being able to access it is only available to Limited Companies as it applies to Corporation Tax as opposed to Income Tax.

The only other exclusions that cannot benefit from the super-deduction are cars, used equipment or integral features within a building.

What can be claimed under the super-deduction according to the Gov.uk website is:

• Solar panels
• Computer equipment and servers
• Tractors, lorries, vans
• Ladders, drills, cranes
• Office chairs and desks
• Electric vehicle charge points
• Refrigeration units
• Compressors
• Foundry equipment

Please note, this is not an exhaustive list.

Hire Purchase contracts also qualify under the super-deduction allowance.

Now is a great time to invest in new capital equipment, to find out how Amplo can help get in touch.

Amplo Commercial Finance is not authorised to provide tax advice.
You should consult an accountant in order to understand the tax consequences of any investment decision.