After such a difficult year, the Government has announced a super tax deduction that will apply to all plant and machinery investments from April 1st 2021. The scheme will last until 31st March 2023 and has been introduced to encourage organisations to start investing in their companies again after a year of the unknown.
The good news is that IT equipment will qualify for the deduction which means if you are planning how to spend your IT expenditure budget in 2021 you will be able to claim 130% of the spend against your corporation tax.
What Qualifies as Plant and Machinery Equipment?
The below is a non-exhaustive list of the different types of products that can qualify for the super deduction tax, for further details please refer to the gov.uk document.
- Computer Equipment and Servers
- Solar Panels
- Tractors, Lorries, Vans
- Ladders, Drills, Cranes
- Office Furniture
- Electric Vehicle Charging Points
- Refrigeration Units
Benefits of Super Deduction Tax
The main benefit is that organisations can claim a 130% tax deduction on any qualifying new and unused plant and machinery equipment that is purchased as a capital asset. The companies that qualify for this super tax deduction are those who are liable to pay Corporation Tax.
As an example, if you spend £10,000 on new IT equipment, you will be able to claim £13,000 against your corporation tax. This delivers a tax benefit of £2470.00. For more detailed information about how this tax deduction will apply to your business, we advise that you speak to your accountant or tax adviser to confirm that your purchases will qualify for this relief.
Commenting on the new incentive, Mark Fryers, Managing Director of Link ICT said, “I think the scheme is a great idea as it will help organisations to improve their IT and telephone systems. Most of our clients were able to quickly adapt to work or deliver education from home because of the ongoing advice we contribute regarding their ongoing IT investment strategy. However, this scheme will be very beneficial to those who still need to upgrade their IT system and infrastructure or those wishing to invest in further improvements.”
Looking at Expanding your IT Infrastructure?
If your school or business is planning to upgrade or invest in new IT and telephone systems please get in touch. We will use our expert knowledge and procurement power to ensure you invest in equipment that will meet your needs.
Please feel free to call our friendly team on 01332 343194 or complete the enquiry form.