A temporary increase to capital allowances available to companies investing new plant and machinery on or after 1 April 2021 up to and including 31 March 2023.
During the period of super deduction, companies can claim 130% on most new plant and machinery expenditure if it would ordinarily qualify for 18% writing down allowances.
A first year allowance of 50% on new plant and machinery which would ordinarily qualify for 6% special rate writing down allowances will apply.
The super deduction will be apportioned if the year end straddles 1 April 2023. There are also rules regarding contracts entered into before 3 March 2021 even if expenditure is incurred after 1 April 2021.
Rules on claw back of allowances if the assets are disposed of also apply.
Annual Investment Allowance Changes
A temporary increase to the limit of annual investment allowance (AIA) from £200,000 to £1,000,000 for expenditure on plant and machinery incurred during the period from 1 January 2021 to 31 December 2021.