B3.331 Super-deduction and special rate first year allowance
The super-deduction and special rate first year allowance temporarily increase reliefs for companies on qualifying expenditure on plant or machinery from 1 April 2021 to 31 March 20231. These are valuable reliefs where the date of expenditure is important for the asset to qualify so businesses will need to maintain records of dates of acquisition especially for larger projects that span 1 April 2021 and 1 April 2023.
In summary the additional reliefs are split into two types:
• a super-deduction of 130% allowances on new plant or machinery that is not special rate expenditure, ie it would ordinarily qualify for the 18% main rate writing down allowance, and
• a first year allowance of 50% on new plant or machinery that qualifies as special rate expenditure, ie it would ordinarily qualify for the 6% rate writing down allowance ― see the B3.332. This is called the SR allowance in the legislation
Where assets are disposed of, on which either of these reliefs were claimed, there will be a balancing charge, which is detailed below, therefore separate records of the qualifying assets will need to be maintained in order to be able to calculate the balancing charge.
The allowances are available for companies within the charge to corporation tax only and not for self-employed businesses or partnerships. There are also the following restrictions for both types of relief2:
• the expenditure has to be incurred on or after 1 April 2021 but before 1 April