Super-deduction tempts 51% of manufacturers to invest

30th April 2021

Investment in the UK’s manufacturing sector is poised to rise as a result of the capital allowances super-deduction. 

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%.

If you wish to speak to a member of our team regarding capital allowances please contact us on 020 7330 0000.