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Super-deduction extension will benefit property landlords

First announced in March 2021 and set to run from 1 April 2021 for two years, the super-deduction allows any investments a business makes in "main rate plant and machinery" to qualify for a 130% capital allowance deduction.

When the scheme was originally announced, property letting companies were excluded from the scheme, meaning only occupiers could claim.

The super-deduction would be available for expenditure on new plant and machinery, which would otherwise qualify for the 18% main rate of capital allowances. A special first year allowance at 50% (the SR allowance) was also made available for expenditure that would otherwise have qualified for the special rate writing down allowance, such as integral features or long life assets.

However, the Government recently approved amendments at the report stage of the 2021 Finance Bill meaning that property landlords will now be able to take advantage of the super-deduction for main pool assets and maintain their annual investment allowance (AIA) for special rate assets.

Under the new rules, a property landlord incurring £1m of qualifying expenditure can save almost a quarter of a million pounds on their corporate tax bill.

To qualify however, expenditure needs to be incurred - which means an unconditional obligation to pay has arisen - on or after 1 April 2021 but before 1 April 2023 on "new and unused" plant and machinery.


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