Super Deduction - What is it and What Plant Machinery Qualifies?

In response to the impact that the COVID-19 pandemic has had on the construction industry, the UK Government has introduced a Super Reduction incentive. This temporary capital allowance measure is designed to help businesses invest in the right machinery and find the means to grow as the economy begins to pick back up. Announced by Chancellor Rishi Sunak in March, it is hoped that this investment will support new and existing businesses alike. But, what is Super Deduction? What plant machinery qualifies?

What is the Super Deduction Allowance?

Hailed as being one of the most appealing tax incentives ever offered by the UK Government, Super Deduction allows businesses to claim back up to 25p for every £1 invested in qualifying machinery and equipment. The covered machinery is that which would normally qualify for the 18% per annum reducing balance ‘main pool’ rate of writing down allowances. It covers a 2 year period from 1st April 2021 and can quantify as much as a 130% capital allowance deduction. Businesses can also benefit from a 50% first-year allowance for a qualifying special rate which has been named the SR allowance.

Why Has it Been Brought in?

After the pandemic, the economy took a significant hit across many industries. The Super Deduction and SR allowances are designed to kick-start investments back into businesses. The goal is to help reinstate productivity over the next two years and, in turn, result in an increase in corporate profits for the government in 2023.

What Plant Machinery Qualifies for Super Deduction?

According to the Government press release, most tangible capital assets used in the course of a business are considered plant and machinery to claim capital allowances. This covers, but isn’t limited to:

  • Tractors
  • Lorries
  • Vans
  • Drills
  • Cranes

The new Super Deduction allowance is said to make the UK’s capital allowance regime more internationally competitive. At Jay Bee Plant Sales, we believe it is a positive move after a year of turbulence and one that will, hopefully, see the industry given the much-needed boost that it and its workers deserve. More information about the Super Deduction can be found in the Budget 2021 HM Treasury document here.