Capital allowances can be claimed when purchasing tangible capital assets to use within a business, enabling the cost to be written off against taxable income.

Companies are currently able to benefit from four significant measures that will allow them to lower their corporation tax bills while helping to stimulate business investment. These measures include a 130% super-deduction and 50% first year allowance, both of which were introduced from April 2021 for investments in qualifying assets.

Capital allowances can be claimed on items that are kept for use within a business – this could be on ‘plant and machinery’ or on ‘integral features’.

Annual Investment Allowance (AIA)

100% relief remains available for qualifying investments up to £1 million until 31 March 2023. This is in addition to the super-deduction and first-year allowances detailed below.

Businesses should deduct the full value of an item that qualifies for AIA from their profits before tax. Claims can be made for most plant and machinery purchases, up to the AIA amount, click here to view qualifying expenditure.

The Super-Deduction

The 130% super-deduction enables companies to claim 130% first-year relief for expenditure incurred between 1 April 2021 and 31 March 2023 on most new plant and machinery investments that normally qualify for 18% main rate writing down allowances.

50% First-Year Allowance (FYA)

This capital allowance for investments in integral features on expenditure incurred between 1 April 2021 and 31 March 2023 offers a 50% FYA for expenditure on new assets that would normally qualify for 6% special rate writing down allowances.

For further details on these allowances please download our factsheet below.