Blog Post

The Super-deduction: use it or lose it

The super-deduction was introduced in 2021 to help with the economic recovery from the COVID-19 pandemic.

From 1 April 2021, companies subject to Corporation Tax could receive tax relief at 130% of the qualifying cost of plant and machinery assets.

The Annual Investment Allowance (recently confirmed to remain at £1m per business), allows 100% of the purchase cost to be offset against a companies annual profits. The super-deduction boosts this by an additional 30%.

With the super-deduction set to end on 31 March 2023, qualifying companies have six months before this allowance disappears.

Any investment in new assets should always be considered alongside the short and long-term goals and cash flow position of the business, but anyone considering asset purchases in the next couple of years, may want to consider whether it makes financial sense to acquire those assets before 31 March 2023.

It must be noted that with rising interest rates, the additional cost of any borrowing should be factored into cash flow forecasts.

If you would like to find out more about the super deduction, and make the most of it whilst it is available, speak to Roake & Cook.

We can offer a range of accounting services, including bookkeeping, year end accounts preparation, and tax advice. We are also Xero software specialists, and we are particularly proficient with our Xero migration service.