UK’s Super Deduction Allowance and Your Care Facility

Published On: 13th October 2022

10 Minute Read

As patient handling equipment specialists, we do our best to keep our customers aware of industry insights and developments so that we may pass along knowledge and relevant opportunities for savings onto them. In April 2021, the UK government introduced the Super Deduction allowance in order to help to stimulate the economy, encourage investments on capital assets, and offer companies the opportunity to save on capital income tax until 31st March 2023.  

Is your care facility aware of the UK’s Super Deduction allowance and how it can benefit your company?  

In this article, we will cover what the Super Deduction allowance is, the criteria needed to qualify, and how your company can lower your corporation tax bill when you invest in new equipment.

What is the Super Deduction allowance?

Within the UK 2021 budget announcements, the Super Deduction allowance was introduced. This allowance is the largest two-year business tax cut in recent history. The aim of its introduction post Covid-19 was to help stimulate the economy and allow businesses to have more capital, to not only grow, but also to invest. Since its introduction on 1st April 2021, companies are allowed to claim a 130% Super Deduction capital allowances on their tax bill from all qualifying equipment they invest in, up until 31st March  2023 

HM Treasury Super Deduction Page

In clearer terms, the UK’s Super Deduction allows your facility to write off the cost of any new assets that are purchased against your company’s taxable income until 31st March 2023.  

Who Qualifies for the Super Deduction Allowance?

Companies of all sizes qualify to utilise the Super Deduction allowance however, there is qualifying criteria in place. 

  • The company must be registered with Companies House. 
  • The company must be liable for corporation tax i.e. the company must be paying corporation tax.  
  • The allowance is only applicable to capital equipment purchases that are brand new.  
  • The allowance is applicable to investments made by your company and processed by 31st March 2023. 

Super Deduction Savings

As previously mentioned, the Super Deduction allowance gives  your company the opportunity to offset 130% of your capital purchase amount, against your taxable income. To help demonstrate how this cost saving can translate to patient handling equipment, we will illustrate an example of a purchase of a new assisted bath at the cost of £10,000. For this purchase, your care facility’s savings would be as follows. 

Bath Purchase Cost £10,000
Super Deduction Allowance (130%) £13,000
Corporation Tax Savings (19%) £2,470
Purchase Cost minus the tax savings £10,000 – £2,470
Final Bath Cost Equates to  = £7,530

The purchase cost for a new assisted bath is set at £10,000. The Super Deduction allowance of 130% would allow you to claim £13,000 against your taxable profit. Deducting the £13,000 from taxable profits, can save the company up to 19% in corporation tax which equates to a 24.7% saving off the original purchase price. 

With this saving, the cost of the new £10,000 bath has really cost your facility only £7,530 (£10,000 minus the tax saving of £2,470) 

Easily Calculate Your Savings for New Patient Handling Equipment

If you are considering investing in new patient handling equipment, you may find it a daunting task to calculate your potential savings. Along with consulting your tax specialist, you can easily compute your savings by multiplying the cost of the patient handling equipment by 24.7 percent and deducting that amount from the original purchase price. The figure you reach will reflect the approximate saving you can have when utilising the Super Deduction allowance.   

With ongoing rising costs and restricted budgets, it is important to consider the many ways in which your care group can find cost savings. If your care facility is considering in investing in any new patient handling equipment and are unsure of whether you qualify for the Super Deduction allowance, consult the website or get in touch with Medaco today. We are available and happy to help.