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Super-deduction prompts 1 in 4 companies to invest

Investment in the UK’s manufacturing sector is set to increase as a result of the Government’s super-deduction tax break, a report has claimed.

Research from manufacturers’ organisation Make UK found that 23% of companies plan to raise investment levels because of the super-deduction, while 28% are in the process of drawing up investment plans.

Of the 149 manufacturing companies Make UK questioned, 49% reported that their investment plans would not change.

Chancellor Rishi Sunak unveiled the super-deduction in his Budget speech on 3 March 2021, in which the Office for Budget Responsibility said it expects the policy to boost company investment by 10%.

With the main rate of UK corporation tax currently at 19%, the 130% super-deduction will cut company tax bills by 25p for £1 (130% x 19% = 24.7%) they spend on qualifying plant and machinery equipment.

Verity Davidge, director of policy at Make UK, said: “The Budget made a clear impact on manufacturers in terms of confidence and they are stepping up their plans to invest in response.

“For too long the UK’s investment performance has been below par and the [super-deduction] incentive should provide a boost in the short-term at least.”


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Sarah Irving

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