Glossary · UK
What is Super-Deduction?
A now-expired UK capital allowance that let companies deduct 130% of qualifying plant and machinery costs from their taxable profits.
Full Definition
The super-deduction was a temporary capital allowance that ran from 1 April 2021 to 31 March 2023, designed to encourage business investment after the pandemic. It allowed limited companies paying Corporation Tax to deduct 130% of the cost of qualifying new plant and machinery from their taxable profits in the year of purchase -- so GBP 100,000 of spending reduced profits by GBP 130,000. A 50% first-year allowance applied to certain special-rate assets. The scheme has now ended and has been replaced for ongoing investment by full expensing, which gives 100% relief on qualifying main-rate plant and machinery, alongside the Annual Investment Allowance. The super-deduction remains relevant when reviewing past accounts, dealing with disposals of assets that claimed it (which can trigger a balancing charge), or understanding how UK investment incentives have evolved. For 2026/27, Corporation Tax is 19% on profits up to GBP 50,000 and 25% above GBP 250,000, with marginal relief in between. Check gov.uk for current allowances before claiming.