Super-deduction extension will benefit property landlords

property lettings

Property landlords can now take advantage the super-deduction for capital allowance. Under the super-deduction, for two years from 1 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 but amendments set out in the Finance Bill, now given Royal Assent, means they are now eligible to apply for the tax break.


The latest amendments were approved at the report stage of Finance Bill 2021 so that property lettings companies will be eligible for the new allowances.


These changes mean that the super-deduction will be available where a company purchases or constructs a building to let out and fits it out with fixtures which contribute to the functionality of the building.  


Fixtures will already qualify for capital allowances and a company can utilise their AIA of up to £1m until 31 December 2021 on such expenditure, resulting in an effective 100% tax deduction in the year of purchase. However, following the amendments to the Bill, property landlords will now be able to take advantage of the 130% super-deduction for main pool assets and maintain their AIA for special rate assets.


Under this change, a property landlord incurring £1m of qualifying expenditure can save almost £250,000 on their corporate tax bill.


To qualify, expenditure needs to be incurred on or after 1 April 2021 but before 1 April 2023 on new plant and machinery. The Chancellor has said that any contracts entered into before 3 March 2021, regardless of when the unconditional obligation arises will not qualify for the new relief.



Blog post uploaded 9 Aug 2021