In order to encourage companies to invest in new capital equipment, earlier this year the chancellor announced a radical new “super deduction” of 130% where they invest in new plant. This would mean that when a company buys plant costing £10,000, they would qualify for a £13,000 deduction in arriving at business profits.
This new deduction, which will run for two years from 1 April 2021, will not be available for motor cars. Certain assets such as fixtures in buildings will only qualify for 50% relief in the first year instead of the not be available for motor cars. Certain assets such as fixtures in buildings will only qualify for 50% relief in the first year instead of the normal 6% writing down allowance.