Super capital allowances

Written by yasiradnan94
3 October 2021

Companies can now claim ‘super’ capital allowances on the purchase of new machinery and plant and to a lesser extent on certain new fixtures and fittings.

These super allowances give the company a deduction of 130% of the cost in the year of purchase for plant and machinery and a 50% deduction for the cost of qualifying fixtures and fittings within commercial buildings. We can help you to determine which fixtures will qualify.

If your company is about to purchase a new delivery van for £50,000 it will be able to claim a deduction against profits of £65,000 in the year of purchase. But beware; the super allowance cannot be claimed in the year the business stops trading.

There are strict conditions for these new allowances; the main one being that the item acquired must be brand new (not second-hand) and cars do not qualify. Also, the equipment must not have been acquired in order to be hired-out.

The super capital allowances only apply to expenditure incurred by companies between 1 April 2021 and 31 March 2023. The main corporation tax rate is due to increase to 25% on 1 April 2023 and this allowance is an incentive to invest before that date.

Unincorporated businesses cannot claim the super capital allowances, but they can claim the 100% annual investment allowance on most items of plant and equipment, including on the purchase of second-hand equipment.

You need to be able to identify separately each item which was subject to a super capital allowance claim as if it is sold later some of the allowance may have to be clawed back.

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