6 months left to claim 130% capital allowance super-deduction

With just over six months remaining to claim the 130% capital allowance super-deduction, there has never been a better time to make additional IT investments and bring planned investments forward.
 

This tax incentive, introduced as a temporary measure by the UK Government, is designed to encourage businesses to invest in new plant and machinery, allowing them to write off the cost of certain capital assets against their taxable income.

Capital assets included in the scheme include computer equipment and servers and certain associated costs for engineering and consulting services. HM Treasury advises that the super-deduction can yield tax savings of up to 25%.

1. Which assets are eligible?

The super deduction is a significant incentive to invest in assets which can enhance a company’s productivity, efficiency and competitiveness.

Companies wishing to claim the allowance should check that the equipment and services they aim to procure qualify for the deduction.

The Treasury has listed “computer equipment and servers” under eligible assets, but software, consultancy and engineering may also qualify.

However, software subscriptions, ongoing support and maintenance fees are not eligible.

More details and a downloadable factsheet are available from HM Treasury HERE:

2. An example of the super-deduction in action

The 130% first-year relief on qualifying capital investments is available only for purchases made until 31st March 2023.

To illustrate the tax savings that the super deduction can deliver, let’s say your business spends £100,000 on qualifying equipment.

When you calculate your taxable profits, your corporate tax deduction will be £130,000 (i.e. 130% of your initial investment). Deducting £130,000 from your taxable profits will save your business up to 19% of that – 19% of £130,000 is £24,700. The amount of corporation tax you’ll save if you qualify for the super-deduction.

With only six months remaining to take advantage of the ‘super-deduction’ on qualifying IT equipment and services investments, there has never been a better time to invest in your business’ infrastructure.

If you have forecasted IT equipment or services spending, Nviron can help you make suitable investments and generate tremendous value from them. However, before embracing this incentive, discussing the super deduction with your accountant and the practicalities of how it can work for you financially would be prudent.

If you want to discuss your IT equipment or services requirements in more detail, please Click Here to speak to one of our specialists. Alternatively, existing customers can contact their designated Account Manager.