Following the announcement of a new ‘super-deduction’ tax scheme for companies looking to invest in new machinery, there has never been a better time to invest in manufacturing equipment. The UK Government’s recent initiative, effective 1 April 2021, aims to incentivise companies to invest in new plant and machinery within the next two years. It is seen as an encouraging step forward in re-building UK manufacturing in the aftermath of the Covid-19 pandemic.

What is the super-deduction tax scheme?

Effective from 1 from April 2021 to 31 March 2023, eligible companies can claim a 130% capital allowance on qualifying plant and machinery investments, as well as a 50%-year one allowance on special rate assets. Under the super-deduction scheme, companies can reduce their tax bill by up to 25p for every £1 invested.

As a result of measures announced at this Budget, businesses will now benefit from four significant capital allowance measures:

  • The super-deduction – which offers 130% first-year relief on qualifying main rate plant and machinery investments until 31 March 2023 for companies.
  • The 50% first-year allowance (FYA) for special rate (including long life) assets until 31 March 2023 for companies.
  • Annual Investment Allowance (AIA) providing 100% relief for plant and machinery investments up to its highest ever £1 million threshold, until 31 December 2021.
  • Within Freeport tax sites, companies can access new Enhanced Capital Allowances (ECA+) and companies, individuals and partnerships can benefit from an increased level of Structures & Buildings Allowance (SBA+) for investments until 30 September 2026.


How could this benefit your company? A huge incentive to invest.

The super-deduction tax reduction will provide huge tax savings for companies planning to invest and provides a strong incentive to make additional investments. It also encourages UK businesses to bring forward any future planned investment so that is happens in the next two years. In the Government’s own words, ‘for every pound a company invests, their taxes are cut by up to 25p’.

What’s included in the scheme?

Most tangible capital assets used in the course of a business are considered plant and machinery for the purposes of claiming capital allowances. There is not an exhaustive list of plant and machinery assets, however the kinds of assets which may qualify for either the super-deduction or the 50% FYA include, but are not limited to: Solar panels, Computer equipment and servers, Company Vehicles, Ladders, drills, cranes, Office Equipment, Refrigeration units, Compressors and Foundry equipment.

How AML can help you?

AML is an advanced manufacturing supplier specialising in the development of manufacturing solutions, and production services for a number of prestigious blue-chip clients. AML is a market leader in delivering flexible manufacturing capability at the leading edge of machining technologies and efficiencies, with particular expertise in aerospace, defence and energy components.

Utilising the very latest technology and equipment, AML manufactures the highest quality precision parts available on the market today. Through our early adoption of technology, we are committed to supporting the factories of the future and continue to invest in our equipment, people and processes with an on-going commitment to research and technology.

For more information on how we can assist you with a specific project please contact us here.

For full information and to access the UK Government fact sheet, click here.