2021 Super‑Deduction: Unlock 130% Tax Relief on New Assets & £1m AIA for Used Machinery

Super‑Deduction Annual Investment Allowance

Introduced in the March 2021 Spring Budget, the Chancellor’s Super‑Deduction allows businesses to offset 130 % of the cost of new plant and machinery—including commercial vehicles—against taxable profit in the year of purchase.

How it works:

• Asset value: £25,000
  • 130 % offset = £32,500
  • At 19 % corporation tax: £6,175 tax saving
• Asset value: £100,000
  • 130 % offset = £130,000
  • At 19 % corporation tax: £24,700 tax saving

This incentive is available from 1 April 2021 for two years, with no cap on the number or value of purchases. It applies to finance through HP, loans, or cash.

Annual Investment Allowance (AIA) – £1 m limit for used assets

The Budget also reinstated a £1 million AIA for used plant and machinery, available only until 31 December 2021. The full 100 % cost can be deducted against taxable profit.

Example for used assets

• Asset value: £25,000 – 100 % offset = £25,000; tax saving at 19 % = £4,750
• Asset value: £100,000 – 100 % offset = £100,000; tax saving at 19 % = £19,000

Ready to maximise your tax relief? Our team of specialists can guide you through the process and help you choose the right machinery for growth. Call us at 0121 541 1444 or request a quotation on any of our product pages.

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