Capital allowances are the deductions which allow businesses to secure tax relief for certain capital expenditure. HM Treasury has published a factsheet on the super-deduction offering companies a 130% first-year tax relief from 1 April 2021 until 31 March 2023. The factsheet also covers the enhanced first year allowance of 50% on qualifying special rate assets has also been introduced for expenditure within the same period. This includes most new plant and machinery investments that ordinarily qualify for 6% special rate writing down allowances. Both these reliefs are only available to companies.
The factsheet includes a helpful definition of plant and machinery that confirms:
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 no 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
- Ladders, drills, cranes
- Office chairs and desks
- Electric vehicle charge points
- Refrigeration units
- Foundry equipment.