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.