UPDATE: 130% Super-deduction to be available for landlords

Update

Further to the continued industry lobbying, HM Treasury has released a legislative amendment to 'Clause 9: Super-deductions and other temporary first-year allowances' of the Finance Bill 2021, enabling background plant and machinery in leased buildings to qualify for the 130% super-deduction or 50% special-rate allowance.

It was initially announced that the new super-deduction and special-rate allowance would not be available to property investors leasing their buildings.  Originally, the draft legislation precluded investors of leased premises from claiming the first year allowances under the general exclusions in section 46(2) of CAA 2001.  Leaving landlords to claim the default rates of 18% and 6% for Plant & Machinery Allowances (PMAs) and Integral Feature Allowances (IFAs) respectively, as the annual writing down allowances on a reducing balance basis – spreading the relief over many years.

This is a welcome change of direction by the Government on the matter, with the extensive industry lobbying helping to convince HM Treasury that this change will really help drive investment under these new policy incentives - given the new super-deduction measures were "designed to stimulate business investment...by increasing the incentive to invest in plant and machinery by offering higher rates of relief".

The amendment ensures that property lessors are not prohibited by the general exclusion on plant and machinery for leasing from claiming the super-deduction / special-rate allowance, in respect of expenditure on background plant or machinery.

This amendment is still draft legislation and does still have to be ratified in law under the Finance Act, though it is highly unlikely that having issued this amendment the Government will reverse this - no doubt to the delight of many property investors and landlords.

Full details of the amendment can be read through download of the HM Treasury document to the right.