Super Deduction Tax - Explained

Super Deduction Tax- How Does it Work?

The super deduction tax allowance initiative was implemented on the 1st of April 2021 and runs for two years; businesses have two months left to take advantage. An attractive tax incentive that allows your company to claim back 25p for every pound invested into ‘qualifying’ equipment and machinery. It was introduced to encourage business investment and boost the post-pandemic economic recovery.

Any investments your business makes into plant and machinery qualify for a 130% capital allowance deduction. The company will also benefit from a 50% first-year allowance for qualifying a special rate (including long life) assets, called ‘SR allowance’. The 130% super-deduction and 50% first-year SR allowance could reduce your corporation tax bills until 2023 because they give qualifying equipment a much higher tax deduction in the tax year of purchase.

Super Tax Deduction Example

If your business were to spend £100,000 on equipment or machinery, the corporation tax deduction would be £130,000, giving corporation tax relief at 19 per cent on £130,000, which is a saving of £24,700.

Super Tax Deduction Qualifying Assets

You can only claim super-deduction for the main rate plant and machinery. However, this includes a wide range of assets that Systems Finance supports businesses to finance daily.

• Printers, computers, lathes and planers • Office equipment and furniture • Vehicles such as vans, lorries, tractors, excavators • Warehouse equipment such as forklifts, pallet trucks • Fire alarm and CCTV systems • And much more!

How can Systems Finance Help?

Systems finance specialises in financing a wide range of the assets listed above. For more information on how Systems Finance can help your business take advantage of the super tax deduction and support your business growth, please get in touch today.

Get in Touch Today

For further advice and support, please call us on 01789 863 557 or click below to send an enquiry and request a callback.