What is the super-deduction tax break – and how does it work?

The super-deduction tax break allows you to claim 130% of what you spend on equipment for your business against taxable profits.


What is the super deduction tax break?

The £25 billon tax break is intended to encourage investment. It provides 25p off company tax bills for every pound of qualifying spending.

How does the tax break work?

The dispensation is available from 1st April 2021 until 31st March 2023 on qualifying plant and machinery investments.


This will mean that on a spend of £100,000, the corporation tax deduction will be £130,000. This gives corporation tax relief at 19% on £130,000, which is £24,700.


Normally, this kind of expenditure would either fall within a company’s annual investment allowance (available at 100%) or be tax-relieved at 18% of the cost per annum.


When a company sells the assets that the expenditure relates to tax charges may arise clawing back the relief.

What can I claim the super-deduction on?

Investments that qualify for the super-deduction include:

  • Solar panels

  • Computer equipment and servers

  • Tractors, lorries, vans

  • Ladders, drills, cranes

  • Office chairs and desks

  • Electric vehicle charge points

  • Refrigeration units

  • Compressors

  • Foundry equipment

Certain expenditure is excluded, in particular the acquisition of company cars.


If you have any specific questions regarding the super-deduction or would like to discuss whether it could be an option for you, please get in touch with our team.