The super-deduction and first year allowances: practical issues

Two temporary first-year allowances for capital expenditure incurred on plant and machinery by companies between 1 April 2021 and 31 March 2023 were introduced in the Spring Budget 2021. This is an exciting development for companies as it is the first time that a super-deduction is available to encourage investment in capital assets.

The super-deduction is a 130% first-year allowance for qualifying expenditure on plant and machinery within the main pool which would otherwise attract a writing down allowance of 18% per annum on a reducing balance basis. The super-deduction is not available for special rate assets. Instead they will benefit from the special rate allowance (‘SR allowance’).

The SR allowance provides a first-year allowance of 50% for qualifying expenditure which would otherwise be relieved at a writing down allowance...