Super Deduction Deadline

January 27, 2025

Supercharge Tax Savings with the Super Deduction

Buckle up! In a bold move to spark business investment post-pandemic, the government rolled out the Super-Deduction in the Spring Budget 2021. This incredible incentive gave companies a massive 130% first-year tax relief on new Main Rate plant and machinery purchases from April 2021. Not to leave anyone behind, a generous 50% First-Year Allowance (FYA) was also introduced for Special Rate plant and machinery.

Deadline

The incentives were initially proposed as a temporary measure, set to run from April 2021 to March 2023. At the time, there was optimism that this period might be extended or that the measures – particularly the Super-Deduction, which provided an additional 30% tax relief above the asset’s cost – could become permanent. While the Special Rate FYA received an extension, it was ultimately confirmed that the Super-Deduction would remain temporary and be withdrawn as planned in March 2023, to be succeeded by the Full Expensing initiative.

Reduced Super-Deduction

Since the Super-Deduction was exclusively available to Corporation Taxpayers, who have the flexibility to select their own year-end dates, provisions were implemented to effectively phase out the incentive for companies with year-end dates that straddle 31st March 2023.

For accounting periods ending on or after 1st April 2023, the 130% of relief provided by the Super-Deduction is substituted by the relevant percentage, as outlined in the table below:

Example

A company that spent £100,000 on new qualifying plant during the year ended 31st July 2023 would be entitled to £120,000 of capital allowances under the adjusted rate of Super-Deduction. For a Main Rate Corporation Taxpayer, this would result in a tax saving of £30,000.

It is important to note that for these accounting periods, the qualifying expenditure must have been incurred during the accounting period itself but prior to April 2023. For example, only expenditure incurred in March 2023 would qualify for a company with a year ended 29th February 2024.

Act Before Its Too Late!

Companies have until 31st March 2025 to fully claim the Super-Deduction if their year-end falls outside the traditional timeline.

For companies with a 31st March year end this serves as a hard deadline to claim the Super-Deduction for any qualifying expenditure incurred in the year ended 31st March 2023.

If the deadline is missed, the allowances are not lost; however, the full cost of the qualifying expenditure (excluding the 30% uplift) must be added to the Main Rate Pool and claimed at 18% on a writing-down basis until the pool is exhausted.

It is evident, therefore, that there are substantial short-term and long-term advantages in utilising Super-Deduction where eligible, as it provides enhanced tax relief both in terms of value and the rate at which the benefit is realised.

Your Next Move? Let’s Maximise Your Tax Relief

Don’t leave money on the table. If you or your client has completed any qualifying projects during the relevant timeframe, now is the time to take action. Whether you need a quick review or a deep dive into the details, Bonham & Brook has your back!

With over 20 years of combined expertise in capital allowances, our specialist consultants are ready to help you unlock every pound of potential savings.

Call us today on 020 3523 9125 and let’s make the most of your investment.

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