Time to take advantage of the Super-Deduction tax break?

What is the Super Deduction Tax Break?

The super-deduction tax break, announced by the Chancellor in his March Budget, means you can claim 130% of what you spend on equipment for your business against taxable profits.

In other words for every £1 spent on plant & machinery you can save 25p on your next corporation tax bill - and is valid until 31 March 2023.

For example, if you spend £100,000 on qualifying plant & machinery the corporation tax deduction will be £130,000 - this will give corporation tax relief at 19% of £24,700.

What type of assets qualify for the tax break?

It’s a wide range and includes:

• Computer equipment and servers

• Office tables and chairs

• Vans, lorries and tractors (but not company cars)

• Cranes, ladders and drills

• Foundry equipment

• Compressors

• Refrigeration units

• Solar panels

The super deduction tax and asset finance

There has been some confusion over whether or not this tax break can be utilised if asset finance is used and the draft legislation refers to some “additional requirements”. However where there is an expectation that legal ownership of the assets will, at some point, pass to you (i.e. as with most hire purchase agreements) then the super deduction should be available.

However you should always be aware of any anti-avoidance rules and there will also be a clawback if the assets are sold before 31 March 2023. It is recommended that advice is sought from your accountant before proceeding.