Insider: May 2021

The super-deduction enables companies that invest in qualifying new plant and machinery to benefit from a 130% first-year capital allowance.

The policy kicked in on 1 April 2021 and allows companies to cut their tax bill by up to 25p for every £1 they invest in qualifying business assets.

Investing companies will also benefit from a 50% first-year allowance for qualifying special-rate (including long-life) assets.

In the UK’s manufacturing sector, research suggests that most companies are planning to raise investment levels in 2021/22.

A study from Make UK found 23% of companies plan to increase investment levels, while 28% are speeding up investment plans.

However, 49% said the super-deduction would not incentivise them to raise their investment plans or their plans were too rigid.

The policy was announced in the Budget on 3 March 2021, with the Office for Budget Responsibility expecting it to boost company investment by 10%.

Verity Davidge, director of policy at Make UK, said: “The Budget made a clear impact on manufacturers in terms of confidence and they are stepping up their plans to invest.

“For too long the UK’s investment performance has been below par and the [super-deduction] incentive should provide a boost in the short-term at least.”

Read our Insider: May 2021 in full here.