Learn more about the Super Deduction scheme, and more

Under the scheme businesses can reduce their corporation tax liability by 130% of the value of most new plant and machinery investments that ordinarily qualify for 18% main rate writing down allowances. This means that on a spend of £100,000, the corporation tax deduction will be £130,000, giving corporation tax relief at 19% on £130,000 which is £24,700. Normally such expenditure would either fall within a company's annual investment allowance and produce relief of only £19,000, or alternatively be tax relieved at only 18% of the cost per annum.

Most tangible capital assets used in the course of a business are considered plant and machinery for the purposes of claiming capital allowances. The range of qualifying plant can be anything from computer equipment to a new production line. Compressed air-related machinery that is eligible for relief includes: Air compressors Dryers, receivers and other downstream equipment Vacuum pumps Nitrogen generators

If you are in the process of procuring equipment and have already contracted the purchase, it won’t be covered. Likewise, if you have an umbrella agreement in place already for equipment and you’re drawing down equipment from that, it isn’t covered. There are exclusions such as structures and buildings and equipment that landlords install. Care will need to be taken on leased plant and equipment which may too be subject to restrictions.

This scheme is designed to encourage firms to invest in productivity-enhancing plant and machinery assets that will help them grow, and to make those investments now. Many of our customers are emerging from the pandemic ready to implement development projects to ensure they are ahead of their competitors and prepared to maximise opportunities as restrictions are relaxed. The Super Deduction allowance equates to a significant cash windfall for businesses and will help to bolster cash flow at a critical time. Moreover, new plant means new, more energy-efficient and reliable technology. So, if you're considering upgrading older, energy-hungry equipment, it is worth looking into the options available and finding out how much you can save by buying and using new machinery. We would be delighted to recommend and quote for potential improvements to your existing compressed air set up.

Further information on the parameters of Super Deduction can be found on the Government website. The British Compressed Air Society is also providing guidance on how the scheme relates specifically to compressed air equipment: Click here to learn more.