Claiming Capital Allowances

Capital allowances of 130% are currently available on some plant and machinery. Buildings and structures do not usually qualify as plant, but there are exceptions.

Agricultural structures have been shown to be ‘plant’ rather than buildings for tax purposes in the case of mechanised grain silos and potato stores. In both cases the structure consisted of a specialised system to keep the produce at exactly the right temperature and humidity.

To claim the super-deduction of 130%, the plant or equipment must be purchased new and unused by a company between 1 April 2021 and 31 March 2023 inclusive. New systems installed in buildings to provide, say, heating, water, lighting, ventilation or lifts, can qualify for a 50% first year allowance, if purchased in the same period.

There are strict conditions for this speeded-up tax relief, the main one being that the items must be acquired new by a company to be used in its trade. Unincorporated businesses can’t claim these allowances, but they can claim the 100% annual investment allowance on most items of plant and equipment, including on the purchase of second-hand equipment.

The main corporation tax rate is due to increase to 25% on 1 April 2023 and the super-deduction is an incentive to invest before that date.

We can help you determine which items of plant or systems will qualify for super-deduction or other allowances, so please discuss your proposed purchase with us.