How to get a tangible payback from your computer equipment expenditure!
Is it time you replaced some of your older IT equipment? There's never been a better time.
Thanks to the super-deduction introduced by the government on 1 April 2021, companies can now claim 130% capital allowances on a whole range of items including computer equipment and servers.
Wow. So what's the catch?
There really isn't one. Under the terms of the super-deduction, for every pound a company invests, their taxes are cut by up to 25p. It also seems that companies using finance and hire purchase-type arrangements for IT equipment can benefit too, provided the payments go towards acquisition and legal ownership of the asset will pass to the company at some point.
You can't use the super-deduction to buy used IT equipment though – that's excluded from the deal.
Why has the Government introduced the super-deduction measure?
It's all about stimulating economic activity. Since the pandemic, business investment has continued to fall – 11.6% between Q3 2019 and Q3 2020. Historically, low levels of business investment have also added to the productivity gap between UK and its competitors. The super-deduction is intended to combat this – and IT equipment will benefit efficiency and productivity.
These capital allowances are expected to give companies a real incentive to invest and even to bring forward planned investments, promoting economic growth.
So what can I claim on?
The phrase used is ‘plant and machinery', but in fact most tangible business capital assets (such as IT equipment) are included for the purposes of the super-deduction. For more information, go to https://www.gov.uk/guidance/super-deduction and https://www.icaew.com/insights/viewpoints-on-the-news/2021/mar-2021/superdeduction-an-attractive-measure-but-start-planning-now
Date published: 30/04/2021