Everything you need to know about the Super-deduction Tax Break

'Splash Out to Help Out!' - Investment in Equipment super tax break

During Rishi Sunak’s 2021 UK Government Budget announcement, many new programmes were put into place to help businesses through the pandemic recovery period. Among those is a new super-deduction tax break. It allows for 130% first-year tax relief for new plant and machinery purchases. It is meant to spur on economic growth and has been nicknamed ‘splash out to help out’. And it’s great news for UK companies. 

Here’s everything you need to know about the super-deduction tax break and how it could help you to purchase new work at height equipment. 

What is the super-deduction tax break?

It allows your corporation to claim 30% more relief on equipment expenses than its purchase price. It runs from April 1st, 2021 until March 31st, 2023 and permits companies to get a super-deduction on qualifying plant & machinery purchases. So, for most business equipment, if you spent £100k, you’d get a corporate tax deduction of £130k. And that means your relief would be at 19% on £130k and come out to £24,700 instead of £19,000 as standard. You can read the exact legislative measures set out by the UK Government and what they temporarily supersede here. A further explanatory note for clarity on these measures is provided here. But don’t buy with the idea of selling it all on in a few years. You’ll have to pay the perk back and corporation tax will likely sit at 25% then.

What types of equipment are covered?

Any kind of business equipment is covered so long as it is not excluded, it is new, it is owned or can be owned, and it is purchased within the scheme window and not part of a drawdown on an umbrella equipment agreement. According to the Evening Standard, “Anything ranging from IT equipment to new solar panels to a factory production line or materials handling equipment should be covered. 

Jon Richardson, head of tax policy at PWC points out that there are exclusions though. Rental equipment is not covered by the main benefit, and neither are structures or buildings. Equipment that landlords install in [the property] being leased out, such as air-conditioning, are also excluded.” Company cars are also excluded. (But, yes the good news is- our working at height equipment is covered.) It’s a good idea to check with your financial advisor before making any equipment purchase if you’re unsure about the super-deduction allowances.

Does it apply to hire purchase?

Yes, but the government specifies that you need to meet special conditions.

 These are:

• You pay a periodical sum in return for bailed assets
• You can own them eventually
• You incurred an expense as the receiver of the goods

Stephen Haddrill, Director General of the FLA, confirmed that this is the case and noted that more than a third of businesses use hire purchase to make investments of this type. So it is good news that hire purchase is included.

At HLS, we’re delighted with this news and believe it will benefit most of our clients. If you have more questions about purchasing work at height equipment on super-deduction, talk to a member of our helpful team today.