Super-deduction for capital allowance
The government has introduced a new rule for the next two years on capital allowances, in order to encourage companies to invest on new plant and machinery assets by given 130% allowance on any purchase made between the 1st April 2021 up to 31th March 2023 known as super deduction that would have been on old rules under the main pool at 18%.
Super deduction is an alternative to the Annual Investment Allowance if there is no enough available allowance to be used. If the assets bough on hire purchase, then an additional condition must be met in order to qualify for the scheme.
The scheme will be based on time apportionment if the accounting period is straddles, any disposal later on will end in balancing charge at 130% on the actual receipt.
If you buy a qualifying asset for £100, you will be able to claim £130 against your total profit, if your company is making a loss or low profit, then the company does not have to use the scheme or can claim up to nil profit and then use the written down allowances rather than suffer balancing charge on disposal.
Fist year Allowance (FYA) an alternative to super deduction and 50% is available on most new plant and machinery that would have been on old rules under special rate rules at 6% claim.
All the above are additional to the Annual investment allowance of 100% given on most plant and machinery assets.