Investing in a Compressed Air System just got Easier
– Super-Deduction Tax Break Announced for Businesses
Announced in the Budget 2021 and designed to encourage UK businesses to invest in the latest productivity-enhancing capital equipment that will help them grow, a new super-deduction tax break is set to act as a major investment catalyst.
What is the Super-Deduction Capital Allowance?
From 1 April 2021 until 31 March 2023, companies investing in qualifying new plant and machinery assets will be able to claim:
- a 130% super-deduction capital allowance on qualifying plant and machinery investments
- a 50% first-year allowance for qualifying special rate assets
This super-deduction will allow Scottish businesses to cut their tax bill by up to 25p for every £1 they invest and provides companies with a strong incentive to make additional investments or to bring forward planned investments in capital equipment such as compressors and compressed air systems.
Vanda Jones, Executive Director of the British Compressed Air Society (BCAS) explains: “The Chancellor’s ‘super deduction’ is a record-breaking opportunity for businesses to reduce their corporation tax liability by 130% of the value of any investment they are making in the next two years on compressed air systems. This equates to a significant cash windfall for businesses and will help to bolster cash flow at a critical time.”
What Plant & Machinery Assets Qualify?
Most tangible capital assets used in the course of a business are considered plant and machinery for the purposes of claiming capital allowances.
The super-deduction tax break provides companies with a strong incentive to make additional investments or to bring forward planned investments in capital equipment such as:
- Dryers & gas generators
- Vacuum pumps
- Low pressure equipment (blowers)
Who is Eligible to Claim?
Companies within the charge to corporation tax on or after 1st April 2021.
Where can I find more Information & Details?
A ‘Super-deduction guidance’ page is available on the GOV.UK website that features a link to an HM Treasury – Super-deduction factsheet where compressors are specifically mentioned in a list of plant and machinery capital asset examples. The factsheet details the four significant capital allowance measures that business will now benefit from resulting from the measures announced in the Budget.
Welcomed by Kerr Compressor Engineers and the British compressed air industry, the BCAS has also produced an informative web page complete with working examples to help explain this Government incentive that has been launched to boost investment in capital equipment. In addition, a Kerr-BCAS factsheet is available view or download.
How can we Help?
Compressed air specialists in Scotland for over 40 years and a full BCAS member since 1998, Kerr is proud of its reputation as a respected and recommended supplier of compressed air products, solutions and services at both a national and regional level throughout Scottish businesses and industry.
- UK.GOV Website & Guidance
- HM Treasury Factsheet – Budget 2021 – Super-deduction
- Kerr-BCAS Factsheet – Super-deduction guidance
- British Compressed Air Society (BCAS) – informative web page
Sources & Credits:
- Many thanks to Vanda Jones, Executive Director of the BCAS for kindly allowing Kerr to repurpose and share their published member support material
- GOV.UK website: Guidance – Super-deduction
Please Note: This news article does not provide any investment, financial, or tax advice. Businesses should always consult with their own legal and financial advisors, accountants or tax experts.