What Does the Super-Deduction Mean for Dentists?

From 1 April 2021 until 31 March 2023, any businesses (companies only) investing in qualifying new plant and machinery assets will be able to claim:

  • a 130% super-deduction capital allowance on qualifying assets and machinery investments
  • a 50% first-year allowance for qualifying special rate assets

The Biggest Business Tax Cut in Modern British History

This super-deduction allows dental companies to cut their tax bill by up to 25p for every £1 they invest. With this scheme in place, companies are expected to benefit to the tune of £25 billion over the next two years.

As the pandemic of course caused many economic shocks throughout the UK, accompanied by much uncertainty, this super-deduction tax relief is designed to encourage businesses and to spur investments that will help those businesses grow and get back on track. However, the deduction will only apply to “companies investing in qualifying new plant and machinery assets” rather than intangible assets.

The super-deduction allows any limited company business to deduct the full value of qualifying assets from profits before tax. Rather than over several years, the full tax relief is received the same year the assets are purchased, therefore reducing your tax liability. This scheme will provide significantly faster tax relief for investments up to £1 million, further helping businesses expand, invest and grow. 

Corporation tax is a tax on profits only, not turnover. Therefore, it is only a tax on businesses that are thriving. Although many businesses have struggled during the rise of COVID-19, many businesses have also had a lot of support from the government over the last year, as the government’s relief measures have meant that companies haven’t had to draw from their own reserves. and there will be more businesses statistically thriving than a lot of people may realise. 

Now is the Time to Invest

The super-deduction will end in 2023, which means companies have two years to take advantage of this scheme before the super-deduction window of opportunity slams shut. After March 2023, corporation tax will rise to 25%, so the government can begin to earn back some of the money that was spent during the height of the pandemic. In the recent Budget, Rishi Sunak explained how the increase of corporation tax is “fair and necessary” in order for businesses to contribute to the UK’s recovery due to how much support they received throughout the pandemic. 

You can find out more about the impact of the budget on the UK’s dentists here.

Worked Example Super-Deduction

Below you can find an example of how this super-deduction can benefit your dental company. In this example, we take a look at the difference in tax savings when a sample dental practice invests in plant and machinery on or before 31st March 2021 compared to on or after 1st April 2021.

Date of Purchase31st March 20211st April 2021
Cost£250,000£250,000
Available allowances:
@100%£250,000
@130%£325,000
Total allowances available£250,000£325,000
Corporation tax benefit at 19%£47,500£61,750
Tax saving£14,250

Contact Our Asset Finance Team

Before this amazing tax opportunity ends, we urge businesses, especially dental practices to increase your investments while you get the 130% tax relief. Two years will fly by quicker than you know. By then the tax relief door will be slammed shut and corporation tax will increase. The benefits to your business will be endless.

If you are interested in investing in assets for your business and also benefiting from 130% tax relief, get in touch with the Samera Finance team. The team here will happily guide you through the process, source various financial options and offer advice and tips that will be integral for your business to thrive during this opportune moment. 

Click here to find out more about our Asset Finance services.

Book a Virtual Consultation

To find out more about your options and what Samera can do to help you, book a virtual consultation with one of the Samera Finance team.

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About Arun Mehra

Arun Mehra FCA is a world leading expert on Dental Business and CEO of Samera. He has extensive expertise on financing, deal structuring and tax issues arising in Dental Businesses.

Outside of Dentistry, you can probably find him with a backpack travelling around the world.

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