If you’ve been thinking of upgrading your business’s hardware, don’t pass up this fantastic opportunity.

Super-deduction BG
© Crown Copyright / © IMS Technology

What is the Super-deduction?

After the economic shocks due to uncertainty revolving around COVID and Brexit, the government has been looking to offer extra support for businesses, and help them grow, to improve the state of the economy. One such incentive is the super-deduction, announced in March.

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

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

What are plant and machinery investments?

According to the official super-deduction factsheet, “most tangible capital assets used in the courses of a business are considered plant and machinery for the purposes of claiming capital allowances”.

Examples of assets that may qualify for either the super-deduction or the 50% FYA include:

  • Solar panels
  • Computer equipment and servers
  • Tractors, lorries, vans
  • Ladders, drills, cranes
  • Office chairs and desks
  • Electric vehicle charge points
  • Refrigeration units
  • Compressors
  • Foundry equipment

What does this mean?

The 130% super-deduction means that any investment into qualifying equipment reduces your corporation tax bill at a rate of 130%. If your business spends £1000 on a new server, your corporation tax bill will be reduced as if you had spent £1300.

Example:

Previous system

  • Company spends £10m on qualifying assets
  • Deducts £1m using the AIA in year 1, leaving £9m
  • Deducts £1.62m using WDAs at 18%
  • Deductions total £2.62m. At a tax rate of 19%, this saves £497,800

With super-deduction

  • Company spends £10m on qualifying assets
  • Deducts £13m using the super-deduction in year 1
  • At a tax rate of 19%, this saves £2,470,000

If you are looking to take advantage of the super-deduction and upgrade your computer, telephony, and/or network systems, don’t hesitate to get in touch. One of our expert advisors will be more than happy to give you an in-depth, no-obligation consultation.

Interested in learning more?