Capital Allowances

Treasury written question – answered on 16th March 2021.

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Photo of Bridget Phillipson Bridget Phillipson Shadow Chief Secretary to the Treasury

To ask the Chancellor of the Exchequer, whether investment in plant and machinery intended to be subsequently leased is eligible for the new 130 per cent super deduction capital allowance.

Photo of Chi Onwurah Chi Onwurah Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (Digital, Culture, Media and Sport)

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

Photo of Chi Onwurah Chi Onwurah Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (Digital, Culture, Media and Sport)

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

Photo of Anneliese Dodds Anneliese Dodds Shadow Chancellor of the Exchequer

To ask the Chancellor of the Exchequer, what assessment he has made of the potential effect of the corporation tax super deduction on levels of fraud, abuse and tax avoidance relating to corporation tax.

Photo of Anneliese Dodds Anneliese Dodds Shadow Chancellor of the Exchequer

To ask the Chancellor of the Exchequer, what assessment he has made of the potential effect of the corporation tax super deduction on levels of fraud, abuse and tax avoidance relating to corporation tax.

Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury

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.

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