London Daily

Focus on the big picture.
Saturday, Oct 04, 2025

Can I qualify for Rishi Sunak’s “super deduction” Budget tax break?

Can I qualify for Rishi Sunak’s “super deduction” Budget tax break?

If you thought the generous new tax break was just for big businesses and not SMEs, think again

There’s been a lot of confusion around Rishi Sunak’s Budget launch of a “super-deduction” tax break for companies investing in plant and machinery.

It was presented as a way of softening the blow of the new 25% corporation tax for the biggest UK corporates, which gave the impression to many that it only applied to big companies such as BT.

Use of the expression “plant and machinery” caused the misapprehension that it was just for factories in the north.

In fact, the measure is far more generous than that.

Here are the answers to the most common questions.

What is the super-deduction tax break?


The idea is that companies will be able to claim a deduction from their tax bill if they invest in new plant and machinery for their business. Under the super deduction, you are allowed a capital allowance of 130% on your qualifying plant and machinery investments.

“Qualifying”? Sounds like weasel words…


Not really. Anything ranging from IT equipment to new solar panels to a factory production line or new fork lift truck should be covered. Jon Richardson, head of tax policy at PWC points out that there are exclusions though. Rental equipment is not covered by the main benefit, and neither are structures or buildings. Equipment that landlords install in property being leased out, such as air-conditioning, are also excluded.

Give me an example of how it works


The boss of a music studio complex is thinking of spending £1 million on new sound engineering equipment. If she makes the purchase, she will be able to deduct £1.3 million from her taxable profits. With corporation tax currently at 19%, that equates to a saving of £247,000 on her company’s tax bill.

Is it just for big companies?


Not at all. SMEs are very much invited to join in the party. The only main exclusion is of partnerships such as accountants, lawyers or architects, and sole traders and other businesses not paying corporation tax.

On the big business side, giants like Amazon will see the benefits because they invest so heavily in their warehouse tech, datacentres, vans and so on. BT’s fibre rollout is also likely to see big payback.

How soon do I have to spend the money to get the perk?


It’s a very limited timeframe to try and stimulate investment during the shock of the Covid economic crisis.

So it only runs from 1 April until 31 March 2023. The idea is that it will both encourage spending that you would have otherwise delayed and push you over the line with investment that you might never have done. After all, a 130% capital allowance could be enough to make you reassess the return you’d get on that new bit of kit.

I’ve already ordered a new IT system but it’s not arriving until May, does that qualify?


No, if you’ve already contracted the purchase it won’t be covered. Likewise, if you have an umbrella agreement in place already for lots of equipment and you’re drawing down equipment from that, it isn’t covered. You may try and argue that the drawdown is a new purchase, but it won’t wash with the taxman.

What if I buy some equipment under the new scheme and sell it on in a couple of years?


You’ll effectively have to pay the tax perk back, and don’t forget, by then, your corporation tax will have gone up to 25%. If it is likely that you’ll be selling the kit on you should think about the impact of that on your cashflow.

Newsletter

Related Articles

0:00
0:00
Close
Jeff Bezos Calls AI Surge a ‘Good’ Bubble, Urges Focus on Lasting Innovation
Japan’s Ruling Party Chooses Sanae Takaichi, Clearing Path to First Female Prime Minister
Sean ‘Diddy’ Combs Sentenced to Fifty Months in Prison Following Prostitution Conviction
Taylor Swift’s ‘Showgirl’ Launch Extends Billion-Dollar Empire
Trump Administration Launches “TrumpRx” Plan to Enable Direct Drug Sales at Deep Discounts
Trump Announces Intention to Impose 100 Percent Tariff on Foreign-Made Films
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Singapore and Hong Kong Vie to Dominate Asia’s Rising Gold Trade
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Manhattan Sees Surge in Office-to-Housing Conversions, Highest Since 2008
Switzerland and U.S. Issue Joint Assurance Against Currency Manipulation
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Thomas Jacob Sanford Named as Suspect in Deadly Michigan Church Shooting and Arson
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
New York Man Arrested After On-Air Confession to 2017 Parents’ Murders
U.S. Defense Chief Orders Sudden Summit of Hundreds of Generals and Admirals
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
Trump Claims FBI Planted 274 Agents at Capitol Riot, Citing Unverified Reports
India: Internet Suspended in Bareilly Amid Communal Clashes Between Muslims and Hindus
Supreme Court Extends Freeze on Nearly $5 Billion in U.S. Foreign Aid at Trump’s Request
Archaeologists Recover Statues and Temples from 2,000-Year-Old Sunken City off Alexandria
China Deploys 2,000 Workers to Spain to Build Major EV Battery Factory, Raising European Dependence
Speed Takes Over: How Drive-Through Coffee Chains Are Rewriting U.S. Coffee Culture
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Ringo Starr Champions Enduring Beatles Legacy While Debuting Las Vegas Art Show
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
FBI Removes Agents Who Kneeled at 2020 Protest, Citing Breach of Professional Conduct
Trump Alleges ‘Triple Sabotage’ at United Nations After Escalator and Teleprompter Failures
Shock in France: 5 Years in Prison for Former President Nicolas Sarkozy
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
BNP Paribas Abandons Ban on 'Controversial Weapons' Financing Amid Europe’s Defence Push
Typhoon Ragasa Leaves Trail of Destruction Across East Asia Before Making Landfall in China
The Personality Rights Challenge in India’s AI Era
Big Banks Rebuild in Hong Kong as Deal Volume Surges
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Arnault Denounces Proposed Wealth Tax as Threat to French Economy
Study Finds No Safe Level of Alcohol for Dementia Risk
Denmark Investigates Drone Incursion, Does Not Rule Out Russian Involvement
Lilly CEO Warns UK Is ‘Worst Country in Europe’ for Drug Prices, Pulls Back Investment
Nigel Farage Emerges as Central Force in British Politics with Reform UK Surge
Disney Reinstates ‘Jimmy Kimmel Live!’ after Six-Day Suspension over Charlie Kirk Comments
U.S. Prosecutors Move to Break Up Google’s Advertising Monopoly
Nvidia Pledges Up to $100 Billion Investment in OpenAI to Power Massive AI Data Center Build-Out
U.S. Signals ‘Large and Forceful’ Support for Argentina Amid Market Turmoil
Nvidia and Abu Dhabi’s TII Launch First AI-&-Robotics Lab in the Middle East
Vietnam Faces Up to $25 Billion Export Loss as U.S. Tariffs Bite
Europe Signals Stronger Support for Taiwan at Major Taipei Defence Show
×