Research and analysis

Research on the effectiveness of the super-deduction

Published 29 May 2025

Prepared by Ipsos for HM Revenue and Customs. The views in this report are the authors’ own and do not necessarily reflect those of HM Revenue and Customs

HM Revenue and Customs (HMRC) Research Report 780 

1. Executive summary 

1.1 Introduction and methodology 

In the 2021 Spring Budget the Chancellor announced the introduction of the super-deduction capital allowance. This offered companies the opportunity to claim a 130% capital allowance against qualifying new plant and machinery assets purchased between 1 April 2021 and 31 March 2023. The announcement also included a 50% special rate first-year allowance for qualifying assets. HMRC commissioned Ipsos to undertake research to understand the effectiveness of this tax policy and the extent to which the super-deduction is responsible for behavioural changes in year one of its operation. This exploratory research has been designed to provide initial qualitative insights on the topic and to inform a more extensive review on capital allowances, including the super-deduction. 

This qualitative research comprised a total of 40 in-depth interviews with companies that were aware of the super-deduction. Of these, 34 were intending to claim the allowance and six were either unsure or not intending to claim. The sample included companies of different sizes operating across a range of sectors. All interviews were conducted by telephone or Microsoft Teams between 18 January and 11 March 2022.  

1.2 Key findings 

Decision making 

This research suggests that the primary drivers of investment decision making are pre-existing business priorities and business needs, which are typically influenced and determined by a range of micro and macro factors. For example, investments aligned to strategic business objectives or growth plans, versus investments that are driven by factors related to technology, regulation and/or social, political, or economic change. 

In terms of tax policies and capital allowances, businesses taking part in this study generally thought of these as secondary considerations once an investment decision is made. Tax policies were not described as being a primary driver of investment decision making, particularly for investments that are of low value or investments needed urgently. 

Although capital allowances tended not to be a key driver of decisions, they do have a role to play and may influence the timing of investments. This is particularly the case for high value, non-time critical investments that are related to longer term strategic business objectives. Specific capital allowances, for example enhanced capital allowances, can shape planned investments. 

Impact 

From this research, there is clear evidence that the super-deduction has accelerated investment and, in some instances, brought forward planned investment into the UK. The primary benefits to businesses were financial, included in these were increased productivity and profitability, business growth and greater competitive advantage in the UK and globally, as well enabling businesses to reduce their tax liabilities and other direct costs and improve their cash flow. In addition to these financial benefits, for some businesses, the super-deduction contributed to increased confidence and business resilience. 

The findings from this qualitative research also suggest that the impact of the policy may be greater in year two as businesses move from a reactive state following the April 2021 policy announcement, to proactively reviewing plans and identifying short-medium term investments that can be brought forward. Investing sooner than planned allows the business to benefit from the policy ahead of its end in March 2023. 

However, while the super-deduction appears to have accelerated investments, there is little evidence to indicate that the policy has generated significant new or otherwise unplanned investment or determined the type of investment, specifically the size, scale or choice of plant and machinery purchased. 

Administration 

Currently, businesses have not considered the claims process or whether they will experience any issues with compliance, as they are not yet ready to take into account the administrative details. There is an expectation that the process is likely to be straight forward, and information is available without needing to contact HMRC directly. The reliance on agents to submit claims is seen to reduce the administrative burden and mitigate any perceived risks. However, this research does point to some concerns about the challenge of tracking disposable assets and providing the necessary documentation, particularly for complex projects. As the deadline for submitting a claim approaches, guidance from HMRC may address some of these concerns and any misunderstanding of the rules around disposals. 

2. Introduction 

2.1 Background 

In the 2021 Spring Budget the Chancellor announced the introduction of the super-deduction capital allowance. This offered companies investing in qualifying new plant and machinery assets between 1 April 2021 and 31 March 2023 the opportunity to claim a 130% capital allowance. The announcement also included a 50% special rate first-year allowance for qualifying assets. 

The super-deduction is due to end in March 2023 and there is a need to assess the effectiveness of this tax policy and the extent to which the super-deduction is responsible for behavioural changes. 

2.2 Research objectives 

This research aimed to provide qualitative evidence of the impact and effectiveness of the super-deduction and to explore the experiences of individual companies, including awareness and understanding of the allowance, the impacts of the allowance, as well as any barriers to claiming. 

Specifically, the research was designed to investigate: 

• how are investment decisions made and what factors are considered? 

• what do businesses understand about the super-deduction and what sources of information do they use? 

• what influence has the super-deduction and other capital allowances (such as enhanced allowances) had on investment decisions? 

• what impact has the super-deduction had, or may it have, on businesses? 

• what are the motivations or barriers to claiming the super-deduction or other capital allowances? 

• what are the administrative considerations associated with claiming? 

2.3 Methodology 

Ipsos conducted 40 in-depth interviews with companies that were aware of the super-deduction. These interviews took place between 18 January and 11 March 2022. Participants were business owners or senior employees responsible for investment decisions or tax affairs and were all aware of the super-deduction. 

Participants were recruited from a sample of businesses provided by HMRC as well as other public databases and included companies of varying sizes and operating across different sectors. 

A more detailed outline of the methodology and participant profile is detailed in the Appendix at the end of this report. 

2.4 Interpretation of findings 

Qualitative approaches are used to explore the nuance and diversity of views, the factors which shape or underlie them, as well as the ideas and situations in which views can change. The results are intended to be illustrative of the range of views and to offer insight into overarching themes, not to be statistically representative. Verbatim comments have been included in this report to illustrate and highlight key points and common themes. Where verbatim quotes are used, they have been anonymised and attributed by business sector, size, and their intention to claim the super-deduction (intend to claim – they have or intend to purchase a qualifying asset by March 2023 and claim the super-deduction and unsure about claiming - they have or intend to purchase a qualifying asset by March 2023 but unsure they will claim the super-deduction). Each verbatim comment sets out the individual view of the participant who made them. They have not been verified (such as statements made about capital allowances) and do not reflect the views of Ipsos or HMRC. 

3. Decision making 

The investment decisions taken by businesses were influenced by a range of factors which can be broadly categorised into macro and micro factors. These influence the priorities for the business and determine the key drivers of decision making. 

3.1 Macro Factors 

Market demand 

Businesses make specific investments that would enhance the customer experience, enable the business to develop their products or deliver new manufacturing contracts. 

“It’s more about customer demand and what they want… we look at what is required.” Manufacturing, medium, intend to claim 

Competitor activity 

This was monitored by some businesses keen to retain their position as market leader or keep pace with their competitors and they were prepared to invest as necessary. 

Technological advances 

Some businesses needed to invest in high-tech equipment, for example audio visual, IT or laboratory equipment to ensure they meet their business objectives improve customer experience or increase efficiency. 

Government policy or regulation 

These were factors for businesses operating in certain sectors or selling specific products that had to demonstrate compliance with specific regulation (including health and safety, accessibility) which required on-going investment to maintain standards. For example, a utility company described how their long-term investment strategy was largely dictated by the regulator, Ofwat. 

“Our industry is governed by regulation from Ofwat so a lot of our investment is geared around complying with this. They issue new policies every 5 years, so our main investment cycle is dictated by this.” Utilities, large, intend to claim 

Carbon neutral or net zero  

Participants mentioned that investment decisions were increasingly influenced by the need to meet carbon neutral or net zero goals. This was more evident among larger businesses that already had a net-zero strategy or were planning to implement one. 

Systemic social, political or economic change 

Brexit and Covid-19 were mentioned by participants as being the most significant systemic social, political or economic change that influenced investment decisions. For example, choosing to invest in IT equipment to meet the changing demand of customers as the business model moved online. 

“I think what happened was when the lockdown came, they reprioritised all the IT spending over the next five years taking into account the new circumstances.” Manufacturing, large, intend to claim 

3.2 Micro factors 

Businesses also described micro factors that influenced investment decision making. 

On-going renewal, replacement and maintenance 

This typically included replacing and renewing consumables, plant and machinery or technology, or re-investing in the refurbishment of existing sites. 

A business strategy of growth and expansion 

Growth strategies could involve a large-scale investment, such as opening a new site or increasing manufacturing capability. Or a small-scale project that helped to reduce direct costs or improve productivity in a bid to increase profits. 

“Profit generation is the primary thing. As a retail business our focus is on sales generation. Our plan is to spend £80m this year on profit and growth that is customer focused.” Retail, large, intend to claim 

3.3 The decision-making process 

The value and urgency of an investment were both key to determining how decisions were made, in terms of who was involved in the process and the time taken to make decisions. Broadly, the process can be split into 4 different approaches: 

Low value investment, that is not time critical 

Decisions relating to investment in low value consumables or equipment may only involve managers, operational or marketing staff. These investments were usually included in the budget set aside for on-going investment. 

Low value investment, urgent need 

Decisions relating to an urgent need to purchase or repair everyday consumables or low value equipment were more likely to be made at a local level rather than involving the head office or senior decision makers. As these types of investments may be essential to the business taking this approach it means they were approved quickly. 

High value, urgent need 

Decisions regarding urgent high value purchases tended to include senior decision makers, such as the Managing Director, Chief Financial Officer or Financial Director, but timings could be expedited if necessary. These investments tended not to depend on passing financial viability tests if the purchase was essential. 

“The lead time is based on a five-year plan for CapEx, which is the basis of the business plan, but renewal spend is more ad-hoc based on business need and can be preventative, for example boilers that are near the end of their life… renewals are not part of the pay back process as they just need doing.” Retail and catering, large, intend to claim 

High value, that is not time critical 

High value investments related to long term strategic objectives such as business growth or expansion were agreed at board level. The lead times for these types of investments could be between 3 to 5 years. In these instances, senior decision makers may seek out tax advice from an external agent or tax specialist within the business (for example, Financial Director, Head of Tax) who presents this information to the board. 

“[Only] if making a large capital investment, will they approach him (Group Tax Manager) to review the allowances.” Manufacturing, large, intend to claim 

The definition of high and low value investments depended on the business context, specifically the percentage of turnover allocated to investment in assets. In the case of one large business that spent £30 million on capital expenditure their threshold for a low value investment was £20,000. Another business defined a low value investment as a few thousand pounds. 

3.4 The use of cost benefit analysis calculations 

When businesses were asked to map out the factors involved in investment decisions, they talked about conducting a cost benefit analysis to examine the return on investment or payback time. 

“It’s all about the pay back. If we spent £100k on machinery and if it generated £50k a year, then we have paid that back in 2 years. But if something took 10 years to pay back, then that is not worth it.” Real estate, small, intend to claim 

Some businesses applied this threshold and if the investment failed to pass this viability test it was less likely to be approved or be considered by the board. 

“There are pay back thresholds, if the project does not reach the threshold it won’t get done, but it’s rare to get to that stage as there is a common sense approach.” Catering and retail, large, intend to claim. 

Other businesses used a simple affordability calculation if they could not afford to make the investment it did not happen. 

However, not all businesses use these thresholds or applied them to all investment decisions. For example, if the investment is urgent or essential it would be approved or if it is a mandatory requirement dictated by government policy or regulatory bodies the financial tests become a secondary consideration. 

“If it’s safety it’s an easy sell. If it’s an investment looking at a business growth model that’s a bit harder to sell.” Energy, large, intend to claim 

3.5 The extent to which tax allowances influence investment decisions 

Participants talked about how they took advantage of tax allowances and other government schemes, such as the Research and Development tax reliefs, Renewable Heat Incentive (RHI), Community Investment Tax Relief. For one business, the latter had influenced the location of investment and, for another, RHI, had influenced the specification of asset purchased. 

“We have taken advantage of RHI and invested earlier than we would have done, replaced boilers sooner and chosen greener options.” Retail, large, intend to claim 

However, they also made the point that tax allowances were perceived to be a secondary consideration as there was an assumption that some form of allowance would generally be available. 

“Tax saving is viewed as a bonus… it’s just less tax liability for us.” Manufacturing, large, intend to claim 

“Tax generally is not an influence as we normally get capital allowance anyway, so don’t think about it… It’s more about needs and requirements than tax saving.” Recreation, large, intend to claim 

Some businesses only considered tax allowances retrospectively once the investments had been made. They would review their asset register and identify which items qualified for allowances at the point of submitting an annual return, rather than using them to guide and inform investment decisions in the first instance. 

In some cases, tax allowances were also secondary to the technical specifications of the investment - factors that were more important to operational managers and particularly relevant if the investment was essential. 

“The spend is essential to keeping our whole business model operational. So, we would feed in what we expect the tax outcome to be, but because the investment is not really optional, then it’s much lower down the list of considerations.” Telecommunications, large, intend to claim 

The influence that tax policy had on decision making was also reduced if it was a low value investment or if the tax allowances did not offer significant cost benefits. 

“There is the ability to flex things a bit… to push some expenditure into a following year or accelerate it… I’m not sure how large an extent that is… in proportional terms, I don’t think it’s that much… I don’t think we really have much expenditure which is affected by tax policy.” Telecommunications, large, intend to claim 

Not all decision makers would consider tax, which could be because they were not aware of relevant tax allowances. 

“…it’s part of my job to make people aware of new allowances, the super-deduction being a prime example. But it’s kind of up to them what they do with that information.” Telecommunications, large, intend to claim 

Businesses may also lack the knowledge of how to apply the tax savings. 

“We are just not that savvy… it’s not even on the management’s radar.” Wholesale, small, intend to claim 

Some businesses consciously chose not to include tax allowances in their cost benefit analysis or their decision making. One participant felt that tax policy was out of their control and could therefore not be a saving that the business could predict or guarantee. 

“Tax is something that we have to pay but there’s no point factoring in something that you can’t control. We deal with profit before tax. We take the view that we might be able to claim something and, if we can, it’s an upside.” Construction, medium, intend to claim 

4. The impact of the super-deduction 

4.1 The impact of the super-deduction on the type of assets purchased 

In Chapter 3 we set out the factors that influence investment decisions. This highlights that business priority or business need was the primary driver and that capital allowances, and tax policy more generally, were often a secondary consideration. In some instances, tax was not considered at all until after the investment had taken place. 

Based on the 40 in-depth interviews there was little, or any, evidence that the super-deduction generated new or unplanned investment or impacted on the type of investment. 

Nevertheless, two businesses had financed the purchasing of their assets differently because of the super-deduction, choosing to buy them outright rather than leasing. 

“Leasing vans is more expensive, as I understand it you can get an allowance against the vans, so it was worth purchasing them outright rather than leasing them.” Manufacturing, large, intend to claim 

“We were deciding between leasing or buying new laptops to allow hybrid working. We could lease for 3 years or buy them, which was a bit more expensive. We looked at impacts of the super-deduction and first year allowance and even with that margin, it was still more expensive to buy them, but less of a cost difference so we decided to buy them.” Wholesale and retail trade, large, intend to claim 

4.2 The impact of the super-deduction on the speed of investment 

The main impact of the super-deduction was that it accelerated planned investments. This was the case for businesses regardless of their size or the sector they were operating in. These investments were based on existing priorities and varied from small-scale IT investment to large-scale expansion projects. These verbatim quotes illustrate the point: 

“We’d have made that purchase regardless, it hasn’t had an effect on what we would purchase, it’s the timings.” Hospitality, large, intend to claim 

“It was on the roadmap for the next 18 or 24 months, this scheme has pushed this decision forward… as soon as we did the analysis, we made a decision.” Manufacturing, large, intend to claim 

4.3 The super-deduction has impacted on planned investments into the UK 

Of the 40 businesses interviewed, only four had a Head Office located outside of the United Kingdom. Two of these businesses talked about how the super-deduction had enabled them to compete against other countries within the group and secure investment into the UK. These UK investments were already planned, but the benefits of the super-deduction, along with its two-year time limit, provided sufficient leverage for the businesses to secure investment much quicker. 

“Super-deduction was a significant element of the support we presented to our Head Office. That was a big help in terms of justifying why we should continue the investment programme and why we should make sure we continue with it in the next 24 months… At that point we were competing, or requesting capital, alongside many other countries in the group. So, it was important to have that time sensitive benefit as part of the business case.” Recreation, large, intend to claim 

Other participants commented on the interest that their Head Office was taking in the UK’s tax policy with one business stating: 

“It hasn’t increased the amount of expenditure but has engaged more economic activity towards the UK.” Energy, large, intend to claim 

The super-deduction may have a greater impact in 2022 to 2023 

Businesses were not prepared for the introduction of the super-deduction. Participants described the announcement as unexpected. Some had already planned or made investments before the super-deduction was available and therefore could not claim the allowance in the first year. 

“Even if I ordered or paid for it in Year 1, it won’t qualify, as agreement to purchase took place before qualifying date, but we are considering how we might use the super-deduction in Year 2.” Manufacturing, large, intend to claim 

Other participants described how they would review their qualifying expenditure which they had already incurred to ensure they claimed the super-deduction where possible. 

“Our year end is in December so we’ve got an analysis from our Capital Expenditure for 31st December 2021, we go through that and say ‘everything that counts as plant and machinery’ and apply the allowance to everything we can.” Energy, large, intend to claim 

Businesses, particularly those who had proactively gathered information about the super-deduction were beginning to plan and prioritise investments scheduled to take place in 2022 to 2023. They also talked about accelerating or increasing their investments to take advantage of the allowance before the deadline. 

“In the second year planning it will be considered more, there was not much lead time for the first year… we might be more inclined to increase size of order or bring forward purchases.” Retail, small, intend to claim 

There was a feeling among some businesses that an extension to the time limit would be useful. This would take account of supply chain delays caused by Brexit and Covid and support businesses completing large-scale and complex investment projects with longer lead times and lengthy decision making processes. 

“Given how long it takes to get things at the moment, another year would have been helpful… if you also need 3 to 6 months to make a decision, you’re 18 months into the period.” Construction, medium, intend to claim 

“Please extend it, we’ve not been able to take advantage due to the lack of cash flow caused by covid – we could therefore accelerate the expenditure we were going to make, definitely could be a sectoral issue” Hospitality, large, intend to claim 

“As our projects take so much planning this has meant that because of the time period the super-deduction is available we are unable to claim because the expenditure is over a longer period. The size, scale and complexity prohibit us from accelerating the projects.” Energy, large, intend to claim 

4.4The super-deduction had a financial impact on businesses 

A strong theme in this research has been that the super-deduction has accelerated planned investments. This specific impact was raised spontaneously and consistently across all businesses. Participants were prompted to describe other ways in which the super-deduction had impacted on their business. Secondary impacts, principally financial, were also mentioned. 

4.5 Secondary impacts 

Increased or improved productivity 

Businesses acknowledged that new machinery was more efficient and helped to speed up production. In some cases, it eliminated the need to outsource elements of the manufacturing process to other companies which also reduced direct costs. 

“Normally we wouldn’t factor in the tax but we are now looking at what we can claim back… We’re looking at the benefits of purchasing the machine now. We can output more units, it will cost us more, but we can save money by being able to claim back the tax.” Manufacturing, large, intend to claim 

Business growth 

Business growth included increasing profits, achieved by impacts such as improved productivity, reduction in direct costs or securing a competitive advantage. Participants described bringing forward plans to open new sites to take advantage of the super-deduction, as they recognised aspects of this investment would qualify. One business had employed more staff, because they invested in the IT necessary to support hybrid working. Another business anticipated needing to employ more staff to operate new machinery and work on the production line. 

Competitive advantage 

Investment in new machinery increased production capabilities and allowed one business to bid for new contracts. One business noted that the availability of the super-deduction gave them a competitive advantage over other companies in their global group. 

“It has increased our UK competitiveness.” Manufacturing, large, intend to claim 

Reduced tax liability 

For some businesses claiming the super-deduction allowed them to reduce their tax liability, specifically Corporation Tax. One business allocated a fixed percentage to the value of qualifying assets that they expected they would claim against which reduced their quarterly tax payments. 

“We’ve allowed a top line figure for tax charge for the year on qualifying assets and included that in calculations to reduce our QIPs.” Retail, large, intend to claim 

Other businesses recognised that incurring qualifying capital expenditure, would reduce their current Corporation Tax liability. 

“…in this new world, we’re going to pay tax of a higher rate in the future. Short term, we will be paying less tax in the next couple of years.” Telecommunications, large, intend to claim 

However, a few participants observed that the super-deduction just deferred their tax liability as they were going to have to pay more Corporation Tax in future. 

“We’re aware that corporation tax rates are going up… the effective deduction is pretty much equal to what it would be when the tax rate is higher.” Energy, large, intend to claim 

“…by getting all your allowances in year one, even though you get the 30% uplift, you’re then forfeiting deductions in future years when the tax rate is higher. So, if you look at it in a total tax terms in the round, the benefit isn’t as big as the headline would suggest.” Telecommunications, large, intend to claim 

Improved cash flow 

Increased cash in the business had a positive impact on confidence and one participant intended to consider redirecting cash to fund other investments. 

“It’s money up front… it’s nice for the cash flow, particularly good if you are a small company” Real estate, small, intend to claim 

Reduced direct costs 

For example, a business was able to introduce an electronic payment system, reducing their overheads and improving the efficiency of the payment process. 

Assets increased business’ value 

One business identified that their investment in plant and machinery assets had increased the value of the company. 

“If I was to sell the business tomorrow… investors will want to purchase the equipment.” Manufacturing, large, intend to claim 

Supported investment in product development 

Businesses made specific investments in their product, for example investing in IT equipment to support a shift to an online platform in response to the changes in market demand created by the pandemic. Another business invested in laboratory equipment designed to make improvements to their existing product range. 

The super-deduction has increased business confidence 

As well as the additional financial impacts on the business, the super-deduction did increase business confidence and resilience. One participant felt the tax allowance had kick started their investment plans after Covid. 

“What the super-deduction may have done is given us more confidence to invest quicker… We started to spend in 2021, but now we’re really spending in 2022.” Hospitality, large, intend to claim 

One participant talked about using the super-deduction to bring forward investments, which in turn increased their confidence in the future of their business. 

“It will take the pressure off in three years’ time… you just don’t know where your business will be in three years’ time and if you suddenly have to find another £300,000… you need to be budgeting for that.” Professional, medium, intend to claim 

Another business invested in office space and, as a result, were able to support hybrid working, recruit and retain staff, which the participant believed increased their resilience. 

5. Awareness and understanding 

5.1 Information sources used 

Broadly speaking participants were first made aware of the super-deduction following the Chancellor’s announcement. Businesses mentioned using a range of different sources of information to find out more about tax policy generally, some of which also provided information about the super-deduction: 

• HMRC (website, bulletins, webinars, guidance) 

• tax advisers (internal and external) and consultants (bulletins, fact sheets, newsletters, advice) 

• trade bodies and associations 

• peer groups or other contacts working in the sector 

• social media and the press (LinkedIn, BBC, Financial Times) 

Businesses were generally confident about being able to easily locate information about tax policies. Some participants we spoke to were specialist tax advisers in their business, but those that did not have that specific role felt able to readily access tax advice either internally, or externally from an agent. 

5.2 Understanding of the super-deduction 

The level of understanding of the specific details of the super-deduction varied. Businesses had either taken a proactive or reactive approach. Some had proactively read information and were clear about what investments would be eligible. Others had heard of the super-deduction but were intending to investigate the rules, for example, around eligibility and claiming, nearer the end of the tax year. 

“It’s too early to tell. Don’t really think about it now.” Wholesale and retail trade, small, intend to claim 

Broadly speaking they were aware of the level of relief, the time limit of 2 years, and that not all assets purchased during that period would qualify. 

However, some businesses were less sure about the exact timeframes for purchasing or placing an order and whether the investments would fit within the deadline. This was particularly evident among businesses delivering long-term complex contracts or in call-off agreements. Others were not certain about the assets that might be in or out of scope, particularly if they had not yet made all their investment decisions or reviewed their asset register. 

“We have continual contracts… it therefore presents some complexity in making sure we can take advantage of the super-deduction and if we can demonstrate the specific dates of work.” Accommodation and food services, large, intend to claim 

Some businesses had already submitted questions to their adviser to clarify their understanding of the policy. One participant had contacted HMRC to query how rules around eligibility applied to their specific business and investment plans but felt that the response offered did not build upon the policy information and guidelines already provided or fully deal with the individual nature of their query. 

5.3 Awareness and understanding of the treatment of disposal of assets 

Awareness of the specific rules relating to the treatment of the disposal of assets was limited, with some participants stating that they were not aware of the rules at all and others saying they knew there was a process to follow but had not yet fully investigated the specifics of what was involved. 

Not all businesses felt they needed to consider the disposal of assets, either because they were long-life assets and would fall outside the period or the value was too low for the rules to be relevant, suggesting there is currently a misunderstanding of the disposal rules. 

See Chapter 6 for a summary of the findings relating to administration and compliance of the super-deduction. 

6. Administration and compliance 

6.1 Administration considerations associated with claiming the super-deduction 

It is worth noting that the qualitative fieldwork began on 18th January and continued until 11th March 2022, therefore no businesses had yet submitted a claim or had started compiling the paperwork to support a claim. 

Broadly speaking, businesses felt it was too early to consider the detail of claiming the super-deduction. 

“Not started to look at the information in detail, will do that in six months’ time if we decide to invest. So far the factsheet seems ‘so simple it’s a bit of a worry’. We are not sure if we will qualify or if there will be some small print that means we can’t.” Manufacturing, small, unsure about claiming 

Not all of businesses had yet identified the qualifying assets. They anticipated that they would review their asset register as the submission deadline approached but, until that point, they were unsure exactly what the claims process would entail. Participants appreciated they would possibly need to go back to suppliers or look up information on invoices to check purchase dates. They expected that this exercise would be necessary if they were using an agent although there was a sense that some of the administrative burden would be reduced if an agent submitted the tax return. 

Participants with tax responsibility recognised that this administration was part of their job and talked about adding flags to existing systems for qualifying assets which was something they do for other capital allowances. 

“Analysing each project which does qualify. Is it short life, is it a special business rate pool? Once we’ve done the analysis into those columns, applying the super-deduction or capital allowance to it is relatively simple. We would be doing that analysis anyway.” Sport, medium, intend to claim 

6.2 Direct costs associated with claiming the super-deduction 

In terms of any direct costs incurred from claiming the super-deduction, those businesses that used an agent or tax adviser either expected it would be covered by their existing fees or any additional charges would be minimal. 

6.3 Concerns about administration associated with claiming the super-deduction 

Whilst many businesses had not yet considered the administration required to claim the super-deduction some did express concerns about the possible challenges. 

Businesses involved in delivering complex large-scale or long-term contracts talked about the difficulties of providing evidence relating to the date of purchase. 

“It’s quite onerous, there’s £160m of additions… but I need to obtain something different from that information, to distinguish between the items which did qualify and those that did not and work out when the contract was signed… we have continual contract… presents some complexity in making sure we can take advantage of the deduction, but we can demonstrate the specific dates of work?” Hospitality, large, intend to claim. 

There was a perception that it may not necessarily be worth the administration time required to make a claim. Some businesses expected they would take a pragmatic approach and accept that they would miss out on tax savings, or take a decision not to claim for low value assets where the tax relief did not justify the administration costs. 

“Everything takes time… it’s trying to strike a good balance… because part of you just thinks it’s not worth the hassle for some of these smaller claims to make sure the audit trail is there to claim it.” Real estate, large, unsure about claiming. 

Some were concerned about the application of the rules for the treatment of the disposal of assets, reflecting a lack of awareness and/or a misunderstanding of the rules. For example, businesses buying large quantities of homogenous assets anticipated that they would struggle to track and identify which assets they had disposed of over a long period of time. 

“That is the other thing that puts me off to be honest. Back to this point is how to track it. You know, if you’re buying in desks and things and office equipment, I mean, I presume at some point, it will just get scrapped, but, you know, how on earth are we going to track that? “ Real estate, large, unsure about claiming. 

6.4 Considerations associated with compliance 

Many businesses had not yet researched the claims process or considered whether they would encounter any compliance issues. In addition, not all had compiled a definitive list of qualifying assets for the super-deduction, so they did not feel able to comment on compliance. 

Those relying on an agent expected their agent to understand the claims process, the paperwork needed and what assets would qualify and by using an agent this would mitigate any challenges or risks related to compliance. 

For these reasons, businesses did not generally expect to experience any compliance issues. 

Those few participants that did have concerns about compliance talked about the challenge of ensuring the proof of purchase dates was correct and they wondered if HMRC would check the details of every asset. 

“On first read it seems great, but the reality is never that good. There can be a mismatch between headline and the devil is in the detail. There’s a lot of subjectivity.” Energy, large, intend to claim 

For some business, aspects of the guidance need clarifying to increase their confidence to submit a claim. For example, the difference between the super-deduction and special rate first-year allowance, the exact information to collect, treatment of the disposal of assets, qualifying expenditure and timeframes for spend. 

“The details have been fairly sketchy on what can and can’t be claimed for.” Hospitality, large, intend to claim 

Participants would welcome more guidance from HMRC when they file their claim. 

“I want clarity on how they are going to audit, the date, disposals, administration of it. How will it work without incurring too much of a burden? I’d like to see a pragmatic approach, not prescriptive.” Real estate, large, unsure about claiming 

6.5 Contacting HMRC for advice about the super-deduction 

Only a couple of participants had already contacted HMRC about the super-deduction. When asked if they anticipated contacting HMRC for advice or guidance about claiming the super-deduction very few expected to do so. The reasons given were: 

• concern about being perceived to be non-compliant 

• that HMRC may offer a different interpretation of the policy which would not provide clarity 

• the business does not have the confidence or level of knowledge they believe is necessary to contact HMRC 

“I would only ever approach HMRC when I have the answer… I would not ask them general information… HMRC apply statutes using their own interpretation… they will present things how they see it and their interpretation is not the only one, or necessarily the right one.” Energy, large, will claim 

“I know that you need to be very specific about your questions in order to get the output you need so I’m not comfortable about jumping into a rabbit hole and I don’t know what I don’t know.” Sport, leisure, medium, intend to claim 

Participants would welcome information from HMRC as the deadline for claiming the super-deduction approaches, such as guidance about qualifying assets, disposal of assets and any specific advice on how to submit a claim. 

“not easy to decipher, understand and collate the information without working with another party (tax adviser/consultant) so smaller organisations are missing out… how can HMRC help smaller businesses… We may have been able to make different decisions if we understood the policy” Sport, leisure, medium, intend to claim 

7. Appendix 

7.1 Qualitative interviews: respondent profile 

Characteristic	Description	Target quota	Completed
Primary Quotas
Super-deduction	Intend to claim this financial year (Mar 2023) / Intended to make a claim next financial year (Marc 2024)	38	36
	Unsure/not decided	Max 7	4
Secondary Quotas
Type of business	Manufacturing	Min 5	6
	Wholesale and retail trade	Min 5	5
	Financial and insurance	Min 5	16
	Electricity, gas, steam air conditioning supply	Mix	1
	Transportation and storage	Mix	1
	Other	Min 5	11
Location of Head Office	UK	Mix	36
	Non-UK	Mix	4
Business size	Micro/small (0-50 employees)	Max 7	6
	Medium (50-249 employees)	Max 15	13
	Large	Max 25	21

7.2 Recruitment process 

Participants completed a recruitment screener questionnaire to establish: 

• awareness of the super-deduction 

• if they had purchased or intend to purchase a qualifying asset 

• extent to which capital allowances influence investment decisions 

• intention to claim the super-deduction 

• sector the business was operating in  

• location of Head Office   

• size of business based on the number of employees  

• use of internal or external tax agent 

7.3 Depth interview discussion points 

The interviews explored: 

• background: overview of the business, size, sector and location of head office

• what investments are already made in plant and machinery, percentage spent annually on investments in plant and machinery and how investments are financed 

• understanding the decision-making process and how tax is factored into the investment. What role do market demand, government, tax policy and competitors play? Is there a single factor? 

• awareness and understanding of the super-deduction and special rate First Year Allowance (FYA). Sources of information for these allowances, including use of agents and any gaps in this knowledge 

• impact of the super-deduction on the assets purchased, such as the specification, size, scale, method of finance. Overall impact on the business as a result of the investment 

• exploring barriers which may exist in relation to claiming the super deduction or special rate FYA amongst businesses that do not intend to claim 

• additional administration or direct costs associated with claiming or ensuing compliance, either experienced or anticipated. Level of awareness of the rules for disposal of assets 

7.4 Further information 

Ipsos UK 
3 Thomas More Square 
London 
E1W 1YW

Tel: +44 (0)20 3059 5000 

Ipsos UK Website Homepage   

Ipsos UK Twitter Account 

About Ipsos Social Research Institute 

The Social Research Institute works closely with national governments, local public services and the not-for-profit sector. Its circa 200 research staff focus on public service and policy issues. Each has expertise in a particular part of the public sector, ensuring we have a detailed understanding of specific sectors and policy challenges. This, combined with our methods and communications expertise, helps ensure that our research makes a difference for decision makers and communities.