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Super Deduction ending – Full expense relief beginning!

Super Deduction ending – Full expense relief beginning!

What was the Super Deduction?

The super deduction allowed companies to obtain tax relief by way of a 130% first-year capital allowance deduction for qualifying plant and machinery costs. It was initially set up to encourage business investment, help economic recovery post-pandemic, and improve the country's productivity levels. 

On the basis that the plant and machinery met relevant conditions, the expenditure must have been ‘incurred’ within the period 1 April 2021 – 31 March 2023 for the super deduction to be claimed.

In order to claim the super deduction, the expenditure must:

  • Qualify for the general pool expenditure.
  • Be new and unused.
  • Not be excluded expenditure (e.g., cars).
  • Have an expected life of under 25 years.

When did it end?

Super deduction ended on 31 March 2023. It is important for companies to be aware of what expenditure qualifies for super deduction and the amount of tax relief that could be claimed.

For any asset disposals of which previously claimed super deduction, the 130% tax advantage will need to be withdrawn. 

Year ends straddling 1 April 2023

The rate of super-deduction requires apportioning if an accounting period straddles 1 April 2023.

The rate should be apportioned based on days falling prior to 1 April 2023 divided by the total days in the accounting period.

New Full Expense Relief

Following the end of the super deduction, the government introduced a new relief. Full expensing offers companies a 100% first-year allowance on qualifying main pool plant and machinery between 1 April 2023 – 31 March 2026. Special rate plant and machinery do not qualify for full expensing; however, a first-year allowance of 50% can be claimed instead.

For the plant and machinery to qualify for the full expensing, they must meet the following conditions:

  • Be new and unused.
  • Not be a car.
  • Not be given to the company as a gift.
  • Not be bought to lease.

What should I do next?

If you would like to discuss your company’s position regarding the end of super deduction or the introduction of full expensing, please contact Ian Timms.

Critchleys Clients: If you have specific questions, don't hesitate to get in touch with your Critchleys contact directly.

Find out more about Ian Timms

Ian Timms

Ian Timms

Ian is a Partner and the Head of Business Tax at Critchleys LLP.