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What is the ‘super deduction’…?

 
Air Compressor Pump System and Equipment Tanks

The recent Budget was something of a mixed bag for business. On the one hand, many companies will face a rise in corporation tax from April 2023. But ahead of that, there’s the opportunity to take advantage of what’s been described as “the biggest tax cut in UK history.” It’s called the super deduction, it could help you transform your compressed air system, and here’s how it works.

What is the super deduction?

It’s a tax break designed to boost company investment and bring that spending forward (so companies invest now rather than sitting on the money). The super-deduction enables companies to get 130% first year tax relief on any qualifying purchases.

How long does the super deduction scheme last?

Not long. It’s already in operation and will end on 31 March 2023.

What does 130% tax relief mean?

You can claim tax relief on lots of things your company buys. But the super deduction supercharges the relief available for certain purchases. If, for example, you spend £100,000 on a piece of plant or machinery right now, you’ll be able to claim a corporation tax deduction of £130,000. With corporation tax at 19%, the super deduction would be worth £24,700. Naturally, the more you invest, the more you’ll benefit from the windfall.

Can I use the super deduction for compressed air equipment?

Yes. Air compressors and other plant and machinery are included in the scope of the relief.

Can I use the super-deduction to buy a used air compressor?

No. Only new equipment is included.

Does the super deduction apply to hire purchase?

There was some confusion about this initially, but yes. Hiring equipment, including air compressors, is included within the super deduction although some additional conditions apply.

Do we qualify for the super deduction?

Check full government guidance here.

How could you use the super deduction?

Perhaps your air compressor is showing its age and you’ve been delaying buying a new one. Maybe you need a reserve compressor but there have always been higher priority purchases. Perhaps you need an upgrade, increasing the air power to cope with business growth. Whatever the reason, there really has never been a better time to buy compressed air equipment.

Talk to us about your plans now on 0114 243 2347.

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