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Last edited 04 May 2021
Capital Allowances - Super Deductions
As part of the government’s post – Covid recovery planning two new capital allowance reliefs are introduced effective from April 1st 2021. These reliefs which will run until March 31st 2023 are doubtless aimed to encourage spending on new plant and equipment for use in a business in any event, as well as to assist companies who need to undertake such expenditure as part of their own strategy to recover from the effects of the pandemic.
Please note that these provisions do not apply to individuals or partnerships.
The two reliefs are:
Reorganising space to deal with the consequences of the pandemic may well mean a substantial outlay on capital items and these provsiions are designed to alleviate the financial costs associated therewith. The 130% allowance means that for every £100,000 of qualifying expenditure the deduction for copropration tax purposes is 30% higher than what is actually incurred. At a corporation tax rate of 19% (current at April 2021) this means an additional 5.7% tax saving on every £100,000 actually spent
Unfortunately, cleaning items, hand sanitisers and PPE (disposable or reusable) typically fall under the general expenditure. Therefore, capital allowances would not usually be applicable to these items.
--Martinc 16:24, 04 May 2021 (BST)
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