Can your business claim a super deduction?
If your business has spent money on plant and machinery and it is subject to corporation tax, then it may qualify for a super deduction which is a temporary allowance you do not want to miss.
Qualifying purchases will need to have been made between April 1, 2021, and April 1, 2023, and will be valid as long as you did not buy the plant or machinery due to a contract you entered into before March 3, 2021.
It is also possible to claim a special rate first-year capital allowance – which is another temporary allowance – if you have bought qualifying or plant machinery as above.
Qualifying Plant And Machinery
There are a few rules, as you might expect, that your business needs to comply with to ensure your plant or machinery qualifies for these allowances. One of the key rules is that the machinery must be new, not used or second-hand.
It also cannot be given to you as a gift, it cannot be a car as these will not qualify for this allowance, and it cannot be bought to be leased to someone else. The exception to this final rule is if it is background plant or machinery within a building. It also cannot be purchased during the period in which the business ceases activity.
What Can I Claim A Super Deduction For?
A super deduction can be claimed on a variety of work tools, including:
- Machines such as computers, printers, lathes and planers.
- Office equipment such as desks and chairs
- Vehicles such as vans, lorries and tractors – but not cars.
- Warehouse equipment such as forklift or pallet trucks and stackers.
- Tools such as ladders or drills.
- Construction equipment, such as excavators, compactors and bulldozers.
- Some fixtures, including kitchen and bathroom fittings and fire alarm systems.
There are some other rules to be aware of, which is why it is best to speak to your accountant to help you make the most of this super deduction, rather than trying to go it alone.
To see how much a business can claim, let’s look at an example which is on Gov.uk. A company called Alpha Ltd bought a lathe for £10,000 on December 1, 2021. It has a calendar year end accounting period.
In the accounting period ending December 31, 2021, Alpha Ltd can claim a super deduction of 130% for this expenditure, giving them a claim of £13,000.