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Everything you need to know about super-deduction relief

Everything you need to know about super-deduction relief

If you're a business owner in the UK, you'll likely have heard of the UK government's super-deduction relief tax policy that's designed to give UK businesses a helping hand in investing. But what is the super-deduction allowance and how could it benefit you? Let's take a closer look.

What is the super-deduction allowance?

In simple terms, the super-deduction allowance is a tax incentive offered by the British government. The allowance allows UK businesses to claim 25p for every £1 they invest in 'qualifying' equipment and machinery for two years starting from 1st April 2021 and ending 31st March 2023.

From the 1st April 2021, UK businesses have been able to claim a 130% super-deduction capital allowance on qualifying machinery and plant investments, as well as a 50% first-year allowance for qualifying special rate assets.

What is the purpose of the super-deduction allowance?

After the economic downturn caused by the COVID-19 pandemic, business investment was put on hold, despite the support offered by the UK government. The super-deduction aims to encourage firms to invest in plant and machinery assets that will enhance business productivity and encourage growth and further investment.

The allowance has been dubbed as one of the most attractive tax incentives for business investment the UK government has ever offered in order to drive growth in the UK economy.

What types of equipment and machinery qualifies for the super-deduction?

The equipment and machinery that qualifies for the tax deduction include all new plant and machinery that would usually be eligible for the 18% main pool rate of capital allowances.

This includes:

- Compressors
- Refrigeration units
- Office desks and chairs
- Computer equipment and servers
- Ladders, cranes and drills
- Vans, lorries and tractors
- Electric vehicle charge points

What plant and machinery qualify for the special rate assets allowance?

The special rate assets allowance covers any plant and machinery eligible for the 6% special rate pool, including essential assets and building features that are expected to last for over 25 years.

This includes:

- Building electrical systems
- Internal water pipes
- Solar panels
- Foundry equipment

It is important to remember that there are certain expenses that aren't included, such as second-hand plant and machinery and company cars.

What happens if I sell assets that my company has claimed the SR allowance or super-deduction for?

It's essential to make sure that any assets are tracked for capital allowances reasons so that you can ensure that they are given the correct tax treatment when they're disposed of.

If you choose to dispose of main pool items, you will need to pay a balancing charge (a 50% tax on the sales proceeds). The other 50% rate will be taken from the special rate pool. If you disposed of the assets after 1st April 2023, the 25% corporation tax rate will apply to the balancing charge.

For more information about the super-deduction relief policy, you can take a look at the government's fact sheet here.

Affordable Pay-monthly Packages

We offer a full range of services to limited companies, solo trader, partnership, charity, LLP, CIC as well as individuals. We have arranged our services into easy to choose packages that suit your needs.

Start-up
£ 50  / Month (+VAT)

This price plan is suitable for the start-up companies who are not VAT registered.

  • Year-end accounts preparation and submission
  • Corporation Tax returns
  • Payroll & RTI submission for 1 employee
  • Personal tax return [salary & dividends income only] (Free)*
  • File confirmation statement (annual return) with Companies House
  • Reference letters for Director only (Free)*
  • Assisting with correspondence from HMRC and Companies House
  • Unlimited face to face advice and email support
  • 1 Director
  • 1 Shareholder
  • Annual turnover should be less than 80K
Limited Company
£ 100  / Month (+VAT)

This price plan is suitable for the companies who are VAT registered and turnover is less than 100K with a couple of employees.

  • Year-end accounts preparation and submission
  • Corporation Tax returns
  • Monthly payroll including RTI submission for up to 2 employees
  • Personal tax return [salary & dividends income only] (Free)*
  • File confirmation statement (annual return) with Companies House
  • Reference letters for Director only (Free)*
  • MTD VAT returns submissions – quarterly
  • Unlimited face to face advice and email support
  • 1 Director
  • 1 Shareholder
  • Annual turnover should be less than 100K
Company Pro
£ 150  / Month (+VAT)

This price plan is suitable for the companies who are VAT registered; turnovers are more than 100K and have 2 directors and shareholders.

  • Company formation (if required)
  • Year-end accounts preparation and submission
  • Corporation Tax returns
  • Monthly payroll including RTI submission for up to 5 employees (Free)
  • MTD VAT returns submissions – quarterly
  • Personal tax return [salary & dividends income only] (Free)*
  • File confirmation statement (annual return) with Companies House
  • Reference letters for Director only (Free)*
  • Unlimited face to face advice and email support
  • 2 Directors
  • 2 Shareholders
  • Annual turnover should be less than 200K
Company Premium
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This bespoke price plan is suitable for the companies who are VAT registered, with more directors, shareholders and employees. Also, annual turnover is more than 200k and requires further bespoke services.

  • Company formation
  • Year-end accounts preparation and submission
  • Corporation Tax returns
  • Monthly payroll including RTI submission all employees
  • MTD VAT returns submissions – quarterly
  • Personal tax return [salary & dividends income only] (Free)*
  • File confirmation statement (annual return) with Companies House
  • Reference letters for the all Directors (Free)*
  • Unlimited face to face advice and email support
  • Flexible and can be discussed
  • Annual turnover should be more than 200K

Add on Services

  1. Personal Tax Returns

    This price plan is suitable for self-employed individuals, landlords and those who need to submit Self-Assessment Tax Returns.

    If you need to submit the Self-Assessment Tax Return, we can offer you competitive prices starting from £150 + VAT. Price can vary according to your nature of income. Please contact us for more details.

  2. Tax Investigation
  3. Business Legal Support
  4. Company Formation
  5. Business Mentoring
  6. ARA accounting services for ATOL & ABTA travel companies

    Our commitment to you is that we’ll ensure all the information we’ve submitted to the Civil Aviation Authority is up-to-date and accurate. 

Taxcare Accountancy was formed to provide Small & Medium Businesses with an affordable, proactive and professional accountancy services…