Super-Deduction and Other Temporary First-Year Capital Allowances

30 - 11 - 2021

The Autumn Budget in October 2021 introduced some new levels of capital allowance. The aim is to help business to rebuild and invest following the Covid-19 Pandemic.

What are Capital Allowances?


Capital allowances are the standardised tax allowable expense which is permitted when writing off an asset in the tax accounts of a business. A business can choose whatever depreciation rate it believes is realistic to write off an assets value in the accounts but these depreciation expenses are not allowable for tax purposes. Instead HMRC’s capital allowance rates are applied.


What are the new Capital Allowances?


The two new capital allowances introduced are:

  •        A 130% first year capital allowance for qualifying plant and machinery assets;
  • .       A 50% first year allowance for qualifying special rate assets.


For what period are these new allowances available?


The new allowances are available for assets purchased between 01 April 2021 and 31 March 2023 for companies.


What if I bought assets before 01 April 2021?


If you entered into a contract for the purchase of an asset before 03 March 2021 then the asset will not qualify for the new allowances.


Who can claim these allowances?


Only limited companies within the charge to corporation tax can claim. Individuals and Partnerships are not eligible.


What Plant and Machinery qualifies for the new Capital Allowances?


Only new plant and machinery will be eligible. Used and second hand assets will not be eligible for the allowances.

Most tangible assets used in the course of business are considered plant and machinery for the purposes of claiming capital allowances. Examples of the kinds of assets are:

  •          Computer Equipment;
  •         Office furniture;
  •          Tractors, lorries and vans;
  •          Solar panels;
  •         Electric Vehicle charge points;

Please note that this is not an all encompassing list. Do not hesitate to ask for advice if you are buying any assets.


How do I claim the extra allowances?


The additional capital allowances will be claimed when calculating the company corporation tax liability for the year. Foremans ensure that all clients claim the maximum allowances available to a client and will do this automatically when calculating the relevant corporation tax liabilities.


If you would like to discuss any of the issues noted above or need an estimate of a particular vehicles Benefit In Kind value please contact us on:                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
Whilst all due care and attention has been taken in the preparation of these notes no liability can be accepted for any omission or item contained therein.  Foremans LLP                                                                                                                                                                                                                                    October 2021








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