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Technology: Capital Allowances

Question for Treasury

UIN 167199, tabled on 11 March 2021

To ask the Chancellor of the Exchequer, whether investment in technology and digital transformation is eligible for super-deduction.

Answered on

16 March 2021

Expenditure on the provision of plant and machinery for leasing is not eligible for the new 130% super-deduction capital allowance, as is the case with other first year allowances such as Enhanced Capital Allowances in Enterprise Zones.

The super-deduction applies to investment on qualifying plant and machinery, including where that plant and machinery is for the purposes of digital transformation.

The Government takes fraud, abuse and tax avoidance very seriously, which is why the Government has taken repeated action at fiscal events to tackle fraud, abuse and avoidance in the tax system.

The super-deduction has been designed to safeguard against those risks. The legislation includes an anti-avoidance provision that applies to counteract arrangements which are contrived, abnormal or lacking a genuine commercial purpose. Further, there are existing rules that exclude connected party transactions from first-year allowances.

Answered by

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