Super Deduction
Invest in IT to grow your business
What is the Super Deduction?
In the Spring Budget 2021 the Chancellor announced a Super Deduction to help stimulate the economy as we move out of the Pandemic lockdown. The Super Deduction started on 1st April 2021 and will run for two years until 31st March 2023 – it allows for a huge 130% super-deduction tax break against plant and machinery assets.
What does this mean for your business?
This massive tax cut gives your business a huge incentive to invest, enabling your business to grow.
It means that you can cut your tax bill by 25p for every £1 you invest. The scheme is available to companies of all sizes as long as you are paying corporation tax.
The use of the new Super Deduction means that there is a huge increase in the tax saving from 19% to 24.7%.
What assets can I claim on?
Your business can claim on any qualifying plant and machinery assets that will enable your business to be more productive such as IT equipment and servers, as well as other tangible assets like machinery or even office desks and chairs. As long as the assets are brand new and not used or leased, if they can be used to allow your business to be more productive, they are likely to be a qualifying asset.
What does that include
- It must be purchased within the scheme window.
- It’s for plant & machinery equipment.
- It must be brand new – it can’t be second hand.
- If it’s a hire purchase, there needs to be an ownership clause.
- It can’t be a drawdown or part of an umbrella equipment package.
Examples include but are not limited to
- Computer equipment and servers
- Mobile apps
- Software applications
- Office desks and chairs
- Tractors, lorries, vans (not cars)
- Solar panels
- Electric vehicle charge points
Interestingly, computer equipment also applies to software as well as hardware and can include the cost of installation and delivery. Even software subscriptions could be included if the contract entered into begins after 1st April 2021. Mobile apps, software integration projects and website design are also qualifying assets as long as the intention is for the software to last more than one year.
Show me how it works
The table below shows an example of a company spending £125,000 on qualifying assets such as IT equipment, servers and software applications. The huge 30% increase in tax savings are clearly seen following the introduction of the Super Deduction incentive scheme.
To summarise, companies can now save tax at a rate of 24.7% of every pound spent on qualifying assets; this is a 30% increase. Now how often do you see that from HMRC?
Want to find out more?
We have teamed up with our fabulous Accountancy partners HJP Chartered to jointly host a FREE WEBINAR
Investment in your IT infrastructure will enable you to scale your business and meet your business growth objectives.
With our expert knowledge we can advise, plan and deliver bespoke solutions to meet your requirements to replace or enhance your existing IT infrastructure. Call us today on 01442 877555 to discuss your IT needs.