What is the Super-deduction?

The super-deduction is a 130% first-year capital allowance for qualifying plant and machinery assets. There is also a less generous 50% first-year allowance for assets qualifying for the special rate pool. The super-deduction will allow companies to reduce their tax bill by up to 25p for every £1 they invest.

This is an exciting and innovative development that should encourage companies to invest in productivity-enhancing plant and machinery assets.


Key points on the 130% super-deduction

  • It does not apply to cars, although it can be claimed on commercial vehicles
  • It does not apply to assets leased out or to assets hired out (e.g. a hire fleet). Although for example in the construction industry, HMRC should accept that plant provided predominantly with an operative is more than just hire and therefore is not excluded and so can qualify.
  • It does not apply to used or second-hand items
  • Any assets going into the special rate pool, such as integral features or long life assets, only qualify for a 50% super-deduction
  • Only companies qualify (not sole traders or partnerships)
  • Only expenditure after 1 April 2021 is eligible, but if the contract is entered into before Budget day (3/3/2021) then the company won’t qualify
  • If you sell the asset you have to bring in 130% of the proceeds as a balancing charge.


How can we help?

At Hawsons we have a dedicated team of expert tax advisers at our offices in Sheffield, Doncaster, and Northampton. Our team of corporate tax advisers work together to provide proactive, well rounded, technically robust tax advice at all stages of a business’ life cycle – from incorporation, right through to exit, wherever in the world you do business.

More from our tax experts

You can find all of our latest tax articles and tax resources here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Free initial meeting

Stephen Charles

Tax Partner, Sheffield

0114 266 7141

Craig Walker

Tax Director, Sheffield

0114 266 7141

Aaron Hemmington

Tax Partner, Northampton

01604 645 600