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Last chance for businesses to take advantage of Super Deduction Tax Relief

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The Super Deduction Tax Break was brought into action in April 2021 to help kickstart the economy post-Covid and provide businesses with an incentive to make additional investments in machinery and tools.

However, this will be the last month the scheme will run.

Coming to a close on March 31st 2023, this month will be the last opportunity for businesses to take advantage of the tax deduction enabling companies to claim a 130% capital allowance on qualifying plant and machinery investments, along with a 50% first-year allowance for qualifying special rate assets.

Over the last two years, the super-deduction has allowed businesses to cut their taxes by up to 25p for every £1 invested.

Most tangible capital assets a business uses can be considered plant and machinery to claim capital allowances. Qualifying assets include solar panels, computer equipment, commercial vehicles, power tools, office furniture and refrigeration units. You can find more details about investment eligibility on the website.

This tax reduction can benefit many businesses that may have suffered financial losses during the pandemic; however, this support was unfamiliar to many business owners. In a previous survey conducted by asset disposal specialists BPI Auctions, only one in eight of those questioned said they were aware of the Super Deduction Tax Break.

Whilst the tax relief may still tempt organisations to invest in new equipment and tools, purchasing used or second-hand machinery, primarily via auctions, can provide many valuable benefits for your business both practically and financially. Purchasing used machinery is not uncommon in the manufacturing and construction industry, with nearly half of those (39%) surveyed claiming they would look into purchasing used machinery first and a further 45% saying they have no preference for the state of the items.

Machinery availability is a common cause of delays in projects, with the survey finding that one in five (20%) of respondents faced delays in work due to delivery times of machinery, and in some instances, deliveries were delayed by nearly three months. While purchasing machinery new can take weeks or months to process, ship and arrive, purchasing through auctions can allow machinery to be on your premises in a matter of days.

Despite availability being a huge advantage, with over one in five of those surveyed claiming it was the main benefit of purchasing machinery through auction, almost three-quarters of respondents said that lower prices and cost savings is what attracts them most to machinery auctions.

Purchasing used machinery can help improve the sustainability and environmental responsibility of your business, such as cutting down emissions from manufacturing new machinery and air miles if ordering products internationally.

While over 80% said they would like to see a reduction in their carbon footprint, when questioned if they would prioritise this over cost savings or their carbon footprint, 80% chose to prioritise saving costs.

David Boulton, Managing Director at BPI Auctions, summarises, “The Super Deduction Tax Break has been a significant opportunity for businesses across the manufacturing, construction and engineering sectors to receive extra financial support, especially those that have been affected most by the pandemic.

“Purchasing used machinery through auctions is not only an effective way to lower equipment costs but winning lots can be with you within a few days, completely removing shipping delays and delivery times you may get from purchasing brand new equipment.”

“Selling machinery assets through online auctions can ensure your items will be sold in a much shorter time period and will remove the expectancy to manage unreasonable buyers potentially faced using public marketplaces. If you’re planning to upgrade your equipment and make the most of the tax break this month, BPI can help dispose of your existing equipment quickly and efficiently.”

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