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Capital allowances ‘super-deduction’ of 130% on plant and machinery

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Capital allowances ‘super-deduction’ of 130% on plant and machinery

The Spring 2021 Budget saw the introduction of a temporary uncapped ‘super-deduction’ of 130% for capital expenditure on plant and machinery between 1st April 2021 and 31st March 2023. This means that capital expenditure of, say, £100k on plant and machinery will be treated as if it was £130k when claiming capital allowances between the dates mentioned above. 

Many businesses have a 31st March year end and some of those businesses traditionally accelerate their capital expenditure into the period immediately prior to 31st March to minimise current year tax liabilities. 

However, following the introduction of the ‘super deduction’ those businesses should consider whether, for this year only, delaying capital expenditure until after 31st March to attract an enhanced 130% ‘super deduction’ is a more advantageous tax strategy for them overall. 

In summary, if your accounting period ends on 31st March 2021 and you anticipate further capital expenditure between now and then which is not already committed, you should consider the timing of it carefully and potentially delay it until after 31st March 2021. Please do not hesitate to contact us if you require any further information or assistance. 

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