Super-deduction extension set to benefit property landlords – but you have to move fast!

Property landlords in Northampton and the surrounding area can now take advantage of the new "superdeduction" announced in the budget back in March 2021.

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Property landlords in Northampton and the surrounding area can now take advantage of the new “superdeduction” announced in the budget back in March 2021.

What is the "Super-deduction"?

Under the super-deduction, for two years from 1st April 2021, any investments a business makes in “main rate plant and machinery” will qualify for a 130% capital allowance deduction.

When the scheme was first announced in March 2021, property letting companies were excluded from the scheme, meaning only occupiers could claim. However, amendments set out in the Financial Bill have now been given Royal Assent, meaning that they are now eligible for the tax break.

The allowance is only available on investments made on or after 1st April 2021 and before 1st April 2023.

What does this mean for property letting companies?

The change means that enhanced allowances will be available where a company purchases or constructs a building to let out and fits it out with fixtures and other assets which contribute to the functionality of the building.

Such fixtures already qualified for capital allowances and therefore a company can make use of their annual investment allowance (AIA) of up to £1million (until 31st December 2021) on such expenditure, resulting in a 100% tax deduction in the year of purchase.

However, following the changes above, property landlords in Northamptonshire and beyond will now be able to take advantage of the 130% super deduction for main pool assets and maintain their AIA for special rate assets.

It is thought that the change will be hugely significant for landlords and the property and construction sectors.

What’s the rush?

To qualify, expenditure needs to be incurred on or after 1st April 2021, but before 1st April 2023 on new and unused plant and machinery. The chancellor has said that any contracts entered into before 3rd March 2021, will not qualify for the new relief.