Now is the time to invest in your system. – Super Deduction explained.

June 9, 2021 2:37 pm Published by

At Harrier Pneumatics we spend a lot of our time supporting companies by ensuring their existing compressed air system is operating as it should, through air audits and regular planned maintenance schedules. However there comes a time when even the best maintained equipment needs to be replaced. Thanks to a new Government allowance this may be the best time to consider upgrading or replacing key parts of your pneumatic plant.

From 1 April 2021 until 31 March 2023, companies investing in industrial air equipment can claim a 130 per cent super-deduction capital allowance.

The equipment covered by the allowance includes

  • Air compressors
  • Dryers and gas generators
  • Vacuum pumps
  • Low pressure equipment

Capital allowances let taxpayers write off the cost of certain capital assets against taxable income. They take the place of accounting depreciation, which is not normally tax-deductible. Businesses deduct capital allowances when computing their taxable profits. Under the super-deduction, for every pound a company invests, their taxes are cut by up to 25p. This means that there is a 130% deduction on most new plant and machinery investments. These would ordinarily only qualify for the 18% main rate writing down allowances. Beyond this there is a 50% first-year allowance for special rate (including long life) assets until 31 March 2023 for companies.

Our partners at Compair have provided an example of what this means in cash back to your bottom line.

“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.”

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.”

Harrier Pneumatics 30 years of experience installing, maintaining and supporting compressed air users makes us the ideal partner to help your business capitalise on these allowances. The Super Deduction covers new rather than already contracted purchases. As the Government guidance, which you can download at our website says: “The super-deduction will give companies a strong incentive to make additional investments, and to bring planned investments forward.” Get in touch today to book a call from one of our engineers.


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This post was written by Harrier Pneumatics