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The UK Budget’s temporary super deduction of 130% for main pool capital allowance eligible expenditure was billed by the chancellor as ‘the biggest business tax cut in British history’.
It is certainly a generous measure but in some circumstances it comes with a sting in the tail. The attraction of the super deduction will very much depend upon the nature of the expenditure incurred and the circumstances of the company in question.
Background – existing capital allowances
In order to look at the impact of the super deduction one needs to consider the pre-existing rules relating to expenditure on items of plant and machinery as well as the proposed changes to corporation tax (CT) announced in the March 2021 Budget.
As most readers will be aware the general scheme of capital allowances revolves around a pooling system which operates so that (in...
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