The super-deduction
This gives a 130% FYA for expenditure on plant and machinery (P&M) that would fall within the main pool. This means that for every pound a company invests, their taxes are cut by up to 25p.
Expenditure is classed as super-deduction expenditure where all the following conditions are met:
Example
Example Ltd purchases new computer equipment for £100,000 on 31st May 2021.
The computer equipment is qualifying plant and machinery and therefore meets the conditions for the super-deduction.
The amount of the super-deduction is £130,000 (£100,000 at 130%). This will receive corporation tax relief at 19% which is £24,700.
Had this purchase been made prior to 1st April 2021, it would have fallen within the company’s annual investment allowance, producing relief of only £19,000 (£100,000 at 19%).
The SR Allowance
An “SR allowance” – in the form of a 50% FYA – may be claimed in respect of qualifying expenditure (referred to as “SR allowance expenditure”).
Expenditure is considered SR allowance expenditure where all the following conditions are met:
What is plant and machinery?
The kind of assets that will qualify for either the super-deduction or the 50% FYA include, but are not limited to: