Take Advantage Of The Super Deduction Capital Allowance

April 5, 2021

Published by Kranlyft Group

Generous capital allowances available in UK

Following the March 2021 budget, from 1 April 2021 until 31 March 2023, companies investing in qualifying new plant and machinery assets in United Kingdom will be able to claim generous capital allowances. The 130% super-deduction and 50% first-year allowance are generous brand-new capital allowances for investments in plant and machinery assets. Both will allow investing companies to lower their corporation tax bills. Capital allowances allow businesses to write off the cost of certain capital assets against taxable income. They take the place of accounting depreciation, which is not normally tax deductible.

Why the super-deduction capital allowance is a great opportunity for you

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

Unique offer for Maeda Mini Cranes

Our customers in the UK can now buy a Maeda Mini Crane at 0% finance

Owning a brand new Maeda MC405CRM-E-3 for only £492.31 per week on 0% finance sounds like a fantastic deal right? For a limited time only, this offer is available in the United Kingdom together with Kranlyft UK and SKM Asset Finance Ltd. Maeda MC285CWM-E-3 and Maeda MC405CRM-E-3 ordered before the 15’th of June (15/06/2021) can take advantage of the offer. Terms and conditions apply*.

Want to find out more about the offer and book a demo? – Contact our Managing Director for more information: Eddie Charity (United Kingdom) Phone: +44 117 982 6661 Mobile: +44 7917 180 637 echarity@kranlyft.co.uk
*Terms and conditions apply, please discuss this with SKM Asset Finance Ltd. Finance is based on a Hire Purchase Agreement over 36 months. The deposit payable in advance is 20% of the purchase price plus the full VAT. Payments will be collected monthly by Direct Debit. Documentation and Option to Purchase Fees will apply. This offer is restricted to incorporated business users only in the United Kingdom and is subject to status. Finance is arranged by SKM Asset Finance Ltd which is Authorised and Regulated by the Financial Conduct Authority.

More about the disposal proceeds

Additional rules have been drafted on how proceeds are taxed for assets on which a Super Deduction (130%) has been claimed and depends on the date on which a disposal takes place. If a disposal takes place in an accounting period that commences before the 1st April 2023, the amount is determined as follows:

  • Divide the number of days before the 1st April 2023 by the total days in the accounting period
  • Multiply that amount by 0.3, and
  • Add 1 to the above result

This means that for periods ending on or before the 31st March 2023, proceeds are taxed at 130% of the amount received, with periods straddling 1st April 2023 receiving a hybrid rate. For periods starting on or after 1st April 2023, proceeds remain taxable at 100% of the proceeds received.

Buy an MC285CWM-E-3 for £316.96 per week

Buy an MC405CRM-E-3 for £492.31 per week

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