How the super-deduction tax can be highly beneficial for your business

16 September 2021

Economic recovery has been at the forefront of conversations for the past year and the government has taken many steps towards making that simpler and faster. One of those steps is the super-deduction tax break scheme. This new £25 billion programme is designed to be beneficial for businesses and to provide an opportunity for enterprises to invest in themselves. So, what are the benefits for your business?

What is the super-deduction tax scheme?

It’s a tax break that has been created by the government to enable businesses to claim back 130% of spend on new (or first year) business equipment against taxable profits. So, if your organisation spent £10,000 on new equipment during the qualifying period you would be able to deduct 130% of that from your taxable profits, which would equate to £13,000. That would create a saving of up to 19% for your business on your tax bill during the qualifying year.

What are the details of the tax break?

  • The scheme applies to equipment that you buy during the qualifying period, which is 1st April 2021 to 31 March 2023.
  • Where you’re making qualifying business purchases that would normally incur main rate capital allowances the 130% super deduction applies.
  • Where you’re buying qualifying plant and machinery that would normally incur special capital rate allowances, a 50% super deduction applies.
  • The super-deduction tax scheme is aimed at both SMEs and large businesses.
  • There are a number of exceptions to the scheme, including sole traders, any businesses that don’t pay corporation tax and partnerships, for example architects and lawyers.

What can you claim for under the scheme?

In terms of tangible capital assets, most will fall within the scheme. The government hasn’t yet provided a full list of what qualifies as plant and machinery under the scheme. However, it has provided a number of examples and these include computer equipment and servers, solar panels, office chairs and desks, vehicles such as tractors and vans, foundry equipment and refrigeration units.

What can’t you claim for under the scheme?

Without confirmation from the government it’s not possible to exhaustively define what isn’t going to be covered by the scheme. However, there are a few obvious exceptions, including used and preowned equipment, assets that are leased out or hired out and cars that are purchased for personal use only.

How can the super-deduction tax break benefit your business?

Many measures have been put in place to help stimulate the economy – and make life easier for businesses that have struggled during the pandemic – as the country attempts to return to some kind of normality. The super-deduction tax break allows businesses to reduce their tax bill at a time when that could be vital. It also provides the opportunity for organisations to invest in productivity-enhancing plant and machinery assets that will help to stimulate economic growth – and to do that now, rather than waiting for the economy to pick up once again.

If your business could benefit from the super-deduction tax break now is the time to invest. Find out how MBM Omega can help supply your office furniture and modifications in compliance with the super-deduction tax break…