Chris Sanger, EY’s Head of Tax Policy, comments on the Budget:
“The Chancellor today heralded his new allowance for capital assets, providing all the relief, and some, in the first year of investment. This “super-deduction” of 130% applies to new and unused plant and machinery, with some exclusions such as cars and leased assets.
“The enhancement of the relief to 130% is a welcome innovation as it avoids the increase in corporation tax rate in 2023 encouraging businesses to delay investment until then. With the super-deduction, 130% relief at 19% today is broadly equivalent to 100% relief at 25% in 2023.
“Providing this relief now should provide the right incentive to invest now, encouraging businesses with longer term plans to bring them forward rather than wait. Whether businesses pay more attention to the siren call of the super deduction or the discordant sound of the future tax rise is yet to be seen.”