Budget 2021 – Super deduction
*Please note, we are not tax advisors or specialists so can only bring you the facts around the government’s super-deduction tax break. We are, however, commercial vehicle experts so can advise on the purchase of a new van or truck.*
As part of the Chancellor’s 2021 budget, it was announced there would be a “super-deduction” tax break for businesses investing in new plant and machinery assets (including vans or trucks) from the beginning of April. But what does that mean in reality?
Below is a short video to help simplify this newly introduced scheme.
So, in a nutshell, companies investing in qualifying plant and machinery assets will benefit from being able to claim 130% first-year capital allowances.
What are capital allowances, you may ask? Well, capital allowances allow taxpayers – usually business owners or self-employed workers – to write the cost of certain assets against their taxable income.
This means under the new super-deduction tax break, for every pound a company invests, their taxes are cut by up to 25p.
For example, if a company spends £100,000 on new, qualifying assets, the company can claim a deduction of £130,000 against taxable profits, making now a great time to invest in qualifying plant/machinery.
The super-deduction is in effect for two years from 1st April 2021 until 31st March 2023 and is intended to spur investment and incentivise companies to bring forward planned investments. This is in a bid to stimulate the economic recovery from the pandemic.
What equipment qualifies for the super-deduction?
Good news – tractors, trucks and vans are all eligible to benefit from the super-deduction. Other types of assets that qualify include, but are not limited to:
- Electric vehicle charge points
- Computer equipment and servers
- Ladders, drills, cranes
- Office chairs and desks
- Refrigeration units
- Solar panels
- Foundry equipment
Can you claim super-deduction if you use asset finance?
Under the draft super-deduction legalisation, plant and machinery investment incurred under a “hire purchase or similar contract” will have to meet additional conditions to qualify for the super-deduction. For further guidance on this, please visit the Government’s website.
Can you claim super-deduction for used equipment?
The short answer is no. Only new, unused assets can be claimed under the new super-deduction legalisation.
So, only new, unregistered vans and trucks would apply.
If you’re thinking of investing in a new fleet for your business, why not get in touch with your local Rygor sales team to find out about our latest offers.
For further guidance on the super-deduction tax break, check out this fact sheet.