This will “ensure the UK capital allowances regime is amongst the world’s most competitive” according to Gov.UK.
Explaining what the scheme means, Portia Pierrel, Director of PwC, said: “The ‘super deduction’ represents a new increased temporary tax relief for companies who invest in certain qualifying capital assets from April 1 2021, and is anticipated to stimulate £25bn in business investment in the UK.
“It is expected to benefit capital intensive businesses, such as manufacturers and utilities companies in particular.
“This measure will allow a temporary first-year allowance; including a super-deduction of 130 percent on most new plant and machinery investments which would have ordinarily qualified for 18 percent relief, and a first year allowance of 50 percent on most new plant and machinery investments which would have ordinarily qualified for 6 percent relief.
“This will provide not only an accelerated timing benefit but additional tax relief on expenditure incurred.”
The move is designed to encourage firms to spend money now before tax rates rise, with the relief due to end just as Corporation Tax begins to rise.