Government Launches Super Tax Deduction on Plant Machinery
You might be thinking ‘why is a high-quality, sustainable, and great value Janitorial equipment and machinery supplier talking about tax?’ And we agree with you. Talking tax is something best left to our accountants while we focus on delivering great customer experiences for you. However, in April 2021, the chancellor (love him or loathe him) announced a pretty exciting new policy, which we thought our facilities management, contract cleaning, and pretty much every other business customers should really know about, and the scheme is called the super deduction scheme.
How do I stand to save?
Under the new Super Deduction scheme, companies can claim 130% capital allowances on qualifying plant and machinery investments made between 1st April 2021 and 31st March 2023. This means that a business can cut their tax bill up to 25p for every £1 they spend. Now, this makes investing in new equipment much more attractive as it offers business essentially a 25% discount. Any UK Limited company that is subject to corporation tax and intends to keep the newly purchased machinery is eligible!
Why are the Government doing this?
The policy has been introduced to encourage investment and promote UK industrial recovery from the pandemic. We see this as a great opportunity to provide a much-needed boost for the cleaning and FM industry. As business closed their doors and welcomes remote working, the FM and Commercial Cleaning sector has struggled, some being unable to afford the new machinery that they require to win or maintain contracts. This super-deduction tax relief will help make these assets much more affordable to those who need them.
What is plant and machinery?
Most tangible capital assets used in the course of a business are considered plant and machinery for the purposes of claiming capital allowances. There is not an exhaustive list of plant and machinery assets. The kinds of assets which may qualify for either the super-deduction or the 50% FYA include, but are not limited to:
- Solar panels
- Computer equipment and servers
- Tractors, lorries, vans
- Vacuum cleaners, floor polishers, scrubber dryers
- Office chairs and desks,
- Electric vehicle charge points
- Foundry equipment
This policy really does make it an excellent time to upgrade or buy new machinery required for business purposes. However, we encourage anybody wishing to take advantage to consult their accountant for advice to confirm that their intended purchase qualifies.
For more information about the scheme, visit HMRC guidance.