The Budget on March 3rd, 2021, introduced some positive news. It raised reliefs for spending on plant and machinery. Specifically, companies subject to Corporation Tax can benefit if they invest in plant and machinery between April 1, 2021, and March 31, 2023. They can claim:
- A 130% super-deduction capital allowance on qualifying investments.
- A 50% first-year allowance for qualifying special-rate assets.
As a result, this deduction enables companies to decrease their tax bill by up to 25p for every £1 invested. Thus, the UK’s capital allowances regime is now among the most competitive globally. Consequently, there has never been a better time to invest in your business. Experts believe this will catalyze major investments, and the government hopes it will boost investment by £20 billion annually.
Chancellor Rishi Sunak stated, “With the lowest corporation tax in the G7, we need to do even more to encourage businesses to invest. For decades, we have lagged behind our international peers. Therefore, we need to unlock cash reserves. Today, I can announce the super-deduction. For the next two years, when companies invest, they can reduce their tax bill by 130% of the cost.”
For more information, click here: Super-deduction of Capital Allowance.