This year’s Spring Budget made for interesting watching, particularly if you are planning to spend money on commercial property during the next two years. The Chancellor announced a super-deduction for all main pool plant and an uplifted write-off for special rate plant and machinery.
Unfortunately, these rules only apply to owner occupiers and tenants but not to landlords due to a restriction for first-year allowances. They also are not available for income tax sole traders, partnerships or LLPs.
Super-deduction for all main pool plant
For main pool plant, a 130% super-deduction applies from April 2021 until March 2023. This allows for an additional 30% over and above the amount of the spend. What this means in practice is that instead of writing-off main pool plant at an annual 18% you will now write-off the total amount at once and receive an immediate additional 30% tax relief on top.
An uplifted write-off for special rate plant and machinery
Special rate pool expenditure, on what is commonly known as ‘integral features’, such as electrical and cold-water systems and lifts, also received an investment boost. Instead of the usual 6% writing down allowance, for the next two years, the expenditure will benefit from a 50% first-year allowance so immediate tax relief is available for half of the spend.
These reliefs are for new and unused plant and machinery, not second-hand assets. So, they will not be available for property purchases, except new assets bought unused from property trading developers.
There is an important caveat, these new reliefs only apply to building contracts that were entered into from the day of the budget, 3rd March 2021, and expenditure must be after 1 April 2021.