The super-deduction offers 130% first-year relief on production plant and machinery investments until 31 March 2023 for companies. A first-year allowance of 50% on most new plant and machinery investments that ordinarily qualify for special rate writing down allowances. This super-deduction allows businesses to reduce their tax obligations by nearly 25p for every £1 spent. Similarly, businesses that are entitled to the first-year allowance for plant or machinery could access a reduction in tax of nearly 10p for every £1 spent.

The majority of tangible capital assets used in the course of a business are considered as plant and machinery for the purposes of claiming capital allowances and as such there is not an exhaustive list available. However, some of the most popular types of assets which will qualify for the super-deduction are:

• Cranes
• Lorries
• Tractors
• Vans
• Solar panels
• Electric vehicle charge points
• Foundry equipment

As may have been expected cars do not qualify for this relief, they have been specifically excluded. To benefit from the relief the assets purchased must not be second hand or refurbished, they must be brand new.

The general rule is that the expenditure must be incurred on or after the 1st April 2021 and before the 1st April 2023. Expenditure is “incurred” on an asset as soon as there is an unconditional obligation to pay for it. Typically, this is the date of delivery but it can also be the date when a certificate is issued. However, super-deductions are not available where the contract to buy the unit was entered into before 3 March 2021. Hence, any unit ordered before that date will not attract super-deductions.

The relief is only available to incorporated companies, but unincorporated businesses continue to benefit from the Annual Investment Allowance (AIA) which permits a deduction of 100% for qualifying plant or machinery expenditure up to £1 million. Assets which qualify for the 50% FYA include, but are not limited to:

• Lifts
• Electrical & lighting systems
• Hot & cold water systems
• Air conditioning / circulation installations
• Solar shading