How to get 130% tax relief when buying heavy machinery

The super-deduction £25bn tax break that was announced in the Chancellors latest Budget in March 2021 is intended to spur investment by providing enhanced tax relief on qualifying spending on plant and machinery. It is hoped this super-deduction corporation tax relief will bring forward business spending for two years and also increase the amount of investment as well.

This means that companies that choose to invest in heavy machinery can apply for 130% tax relief instead of just 100%.

How the super-deduction works

The super-deduction offers 130% first-year relief on qualifying main rate plant and machinery investments from 1st April 2021, until 31st March 2023, for companies.

For most business equipment, there will be a super-deduction of 130% of the expenditure incurred. This will mean that on a spend of £100,000, the corporation tax deduction will be £130,000, giving corporation tax relief at 19 per cent on £130,000, which is £24,700.

Normally such expenditure would either fall within a company’s annual investment allowance and produce relief of only £19,000, or alternatively be tax-relieved at 18% of the cost per annum. For a company with an accounting year to 31st March, the super-deduction calculation is straightforward. That’s also the case for any other year-end providing the year-end falls before 1st April 2023.

Commenting, James Merritt said, “This is an ideal opportunity for companies contemplating the investment in new machinery, or planning production line upgrades to bring forward plans to take advantage of the scheme. This should facilitate growth in manufacturing within the UK, will assist in boosting the economy, and also support the growth of manufacturing supply chains within the UK.”

Full details c an be found on the gov.uk website.

Planning your next heavy machinery move project?

If you are considering a heavy machinery movement project and would like advice, the Merritts team will be happy to help. With nearly 100 years of experience, we have the specialist equipment and knowledge to deal with any machinery moving scenario. Please get in touch.