Time to maximise relief using the super deduction

The super deduction introduced in Finance Bill 2021 to amend part 2 of CAA 2001 provides two-year temporary first year allowances (FYA) for qualifying capital assets in the form of plant and machinery.

Given that this scheme is due to end in under a year’s time this article discusses the need to maximise the cash saving opportunities that the super deduction presents before the curtain is drawn. It also explores the measures that may be introduced in future to make capital allowances more lucrative to businesses.

What is the super deduction?

The super deduction is available only to businesses within the charge to corporation tax. The scheme took effect from 1 April 2021 and will end on 31 March 2023. It excludes contracts/agreement for some cost items entered into before 3 March 2021.

The super deduction provides 130% first year deduction in respect of...