In this article, our sales director gives some guidance on how to take advantage of the 130% super deduction on qualifying plant and machinery investments.
In the 2021 Budget, the Chancellor announced a temporary tax relief that allows companies to claim enhanced capital allowances on qualifying plant and machinery assets – which includes office furniture and equipment. The Super Deduction relief is due to finish at the end of March 2023, therefore we are now in the final months to take advantage of the relief.
Is my company eligible for the tax relief?
Firstly, the purchases need to be made by an organisation that pays corporation tax, it is not available to individuals, and the company must have made sufficient profit to set the deduction against. The purchases must also be completed during the period of 1st April 2021 up to 31st March 2023.
Now is the perfect time to invest in new office furniture and equipment – purchases that fall under the category of Plant and Machinery including, but are not limited to:
- Office furniture including desks, chairs, meeting pods, breakout furniture and storage solutions.
- Office equipment, including computer hardware, printing/copying equipment, server hardware, etc.
- Warehouse equipment including racking, shelving, forklift trucks, and other handling equipment.
Companies can claim 130% capital allowances on plant and machinery investments that would usually qualify for 18% tax relief. For example, a company investing £100,000 could claim a deduction of £130,000 against taxable profits, saving up to 19% of that – or £24,700 on its corporation tax bill.
Do assets on a finance lease qualify for the super-deduction?
No, when leasing you do not have title of the equipment as it is a lease rental. As such you will not be able to claim the super deduction tax relief. However, you are able to offset all the rental payments against profits using the annual capital allowances to reduce your tax bill.
For detailed information and to understand more about the scheme, take a look at the information page on the Government website.