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Time is running out for companies to capitalise on Super Deduction tax savings, warns Ascendis.

Businesses only have weeks left to claim the temporary Super Deduction tax relief that allows them to cut their tax liabilities by 25p for every pound they spend on eligible investments.

With the clock ticking away, North West Accountants Ascendis want as many companies as possible to benefit from this generous capital allowance, which allows claimants to offset expenditure on plant and machinery against their Corporation Tax bill, before it closes on 31 March 2023.

Launched back in April 2021, the Super Deduction and associated first-year allowance is an excellent incentive for investment especially as there is no cap on the expenditure which qualifies, unlike the Annual Investment Allowance.

Using this new measure, companies can claim an allowance of 130 per cent on most new plant and machinery that ordinarily qualify for main rate writing down allowances of 18 per cent.

They can also use the first-year allowance of 50 per cent on most new plant and machinery investments that ordinarily qualify for special rate writing-down allowances of six per cent.

Andy Wilson, Tax Director at Ascendis, said: “There is a wide range of tangible assets, used in the day-to-day running of a company that is eligible for this tax relief.

“Ranging from office furniture, ladders, cranes and drills to solar panels and electric car charging points. Once this tax relief ends in March, this level of support isn’t likely to be seen again and it could help firms to manage their Corporation Tax bill.”

Andy said that the relief is only available on the acquisition of new plant and machinery and was only for limited companies.

However, he added that unincorporated businesses can continue to benefit from the Annual Investment Allowance (AIA), which permits a deduction of 100 per cent for qualifying plant or machinery expenditure up to the threshold of £1 million.

“Given that Corporation Tax rates are due to rise for more profitable companies in April 2023, now is a good time to be thinking about making any significant purchases to take advantage of the Super Deduction and lower tax rate,” he added.

If you would like advice on claiming tax relief via the Super Deduction, please get in touch.

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