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Super-deduction tax incentive offers key opportunity for compressed air investments

CompAir is encouraging British firms looking to invest in new industrial air equipment to take advantage of the government’s super-deduction tax incentive, announced in the 2021 Budget by the Chancellor of the Exchequer

From 1 April 2021 until 31 March 2023, companies investing in industrial air equipment can claim a 130 per cent super-deduction capital allowance. This covers compressors, dryers and gas generators, vacuum pumps, and low-pressure equipment.

The super-deduction allows businesses to cut their tax bill by up to 25p for every £1 invested. This creates a real opportunity for businesses looking to invest in new industrial air systems to make significant financial gains.

Companies will also be able to claim a 50 per cent first-year allowance on qualifying special rate assets, which would ordinarily only be eligible for six per cent.

compressed air for industry

Tax Incentive

Following the impact of the Covid-19 pandemic on the economy, and the predicted fallout in the months to come, it is hoped the measures will encourage firms to invest in productivity-enhancing plant and machinery assets that will help them to grow in years to come.

Andrew Power, Sales Director for Northern Europe at CompAir, said: “The super-deduction tax incentive is a fantastic opportunity for British businesses over the next two years. Not only will this tax break equate to a significant cash windfall for these organisations, but it will also help bolster cash flow for businesses at a really critical time.

“For instance, if a company spends £100,000 on qualifying industrial air equipment, the company can deduct £130,000 when it comes to calculating its taxable profits. As a result, the company will then save up to 19 per cent of that – equivalent to £24,700 – on its corporation tax bill*.

“Some exclusions do apply, namely for equipment that landlords would install, and leased plant and equipment, which may be subject to some restrictions.

“We welcome this initiative from the government, believing it will play a key role in helping businesses to grow in the coming years.”

To find out more about the super-deduction tax incentive, the UK government has issued guidance which can be read here:

https://www.gov.uk/guidance/super-deduction

* The example is a guideline only. Customers and/or distributors should refer to the UK government’s website and/or their own financial advisors for tax implications.

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