In his Budget speech, Chancellor Rishi Sunak announced a new ‘super-deduction’ for companies that invest in qualifying new plant and machinery between 1 April 2021 and 31 March 2023. But what does that mean in practice? Put simply, for every pound a company invests, their taxes will be cut by up to 25p.
Significant new capital allowances
The super-deduction means that a company can claim allowances of 130% on most new plant and machinery investments ordinarily qualify for 18% main rate writing down allowances
In addition to the super-deduction, businesses will now benefit from a number of new tax reliefs:
- A first-year allowance of 50% on most new plant and machinery investments that ordinarily qualify for 6% special rate writing down allowances, until 31 March 2023
- Annual Investment Allowance (AIA) providing 100% relief for plant and machinery investments up to £1 million, until 31 December 2021
- Within Freeport tax sites, companies can access new Enhanced Capital Allowances (ECA+)
- Companies, individuals and partnerships can benefit from an increased level of Structures & Buildings Allowance (SBA+), until 30 September 2026.
Read the full super-deduction factsheet here
Van benefit charge nil-rating for zero-emission vans
From 6 April 2021, a nil rate of tax applies to zero-emission* vans within the van benefit charge. In 2020/21 such vans have a van benefit charge at 80% of the standard flat rate of £3,490.
*A zero-emission van is a van which cannot in any circumstances emit CO2 emissions when driven.