The 130% tax super deduction means you might actually look forward to your tax bill this year.
Back in 2021, the government announced some temporary reliefs for businesses, including a big tax super-deduction’ and it turns out you could save money on a huge range of business purchases.
But be warned; time is ticking on the opportunity to make the most of this tax super-deduction – there are just a few weeks left before it ends on 31st March 2023.
Wondering what it is and if you can make use of it? Read on…..
What Is A Tax Super-Deduction?
No, it’s not a bad superhero name. It’s a way for your company to save money on some of the essentials you bought between specific dates in 2021 and 2023.
Following the pandemic, the Chancellor announced some temporary measures to help out UK businesses in their spring 2021 budget. This included what was referred to as a ‘super-deduction’ – an increase in the tax relief available on qualifying assets. The key word there is qualifying, so keep reading to find out what exactly you can claim on.
To put it simply, it applies to expenditures incurred from the start of April 2021 to the end of March 2023. Companies can claim 130% capital allowances on plant and machinery, things like computer systems, tractors, HGVs, solar panels and robotic equipment, oh and new phone systems! So quite a lot!
Essentially, you’ll get a tax cut of 30p for every £1 spent on things that qualify. You can learn more about it here
Can Anyone Claim A Super-Deduction?
Not everyone will be able to take advantage of what is one of the government’s biggest tax incentives. But luckily, many will.
The easiest way to find out if you can claim a super-deduction is to know whether you pay corporation tax. If you do, you can claim a super tax deduction.
The people who will miss out on this saving are sole traders, LLPs and partnerships. But good news if you’re a landlord, because the government did extend it to include landlords investing in building machinery, solar, EV charge points and refrigeration.
Sounds Good. What Kind Of Purchase Does The Super-Deduction Apply To?
Now, this is the important bit. There are a lot of purchases that this big tax saving won’t apply to, and that includes things that are second-hand, used or lease hired. But…
You can buy using hire purchase and still qualify to get 130% of your asset’s cost back in tax write-offs, so long as you’re getting something new and unused.
So, what can you actually claim for? Some of the big things include…
- Vans, lorries, trailers
- Cranes, diggers, excavators
- Production equipment, robotic arms
- Tractors, combine harvesters, crop sprayers
- Computer equipment and servers
- Solar panels
- Electric vehicle charging points
That’s A Lot Of Construction Stuff. How Can A Business Make Use Of The Super-Deduction?
If you’re a company that doesn’t deal with or require a fleet of diggers or an army of robots (though we’d all love one), you can still benefit.
Outside of farming and construction industries, most businesses will be purchasing computer equipment and things like servers and other tech devices. Within this category, you can get a tax super-deduction on…
- PCs, laptops or Macs
- Printers
- Phone systems
- Broadband
- Office chairs and desks
- Software like accounting programmes (not including subscriptions for software, just purchases)
- The costs associated with implementing new software or hardware
- Engineer, consultant or service costs (this can be a biggie for companies who outsource support)
Ok, So I Can Upgrade My Businesses Comms And Make A Tax Saving?
That’s right! You can get better connected and get more than your money back in tax deductions.
But only until 31st March this year, and of course, only if you’re turning enough profit to make the tax deduction worth it for you. If you’ve been thinking about upgrading your phone system, then now is the time with this limited incentive.
But act fast.
You might have heard of the ‘big copper switch-off’ happening in 2025. If not, it might be the prompt you need to consider switching to fibre optic broadband.
In 2025, it’s planned that all copper wire internet will be ‘turned off’, leaving you without any internet connection from that day. You won’t be automatically switched over to fibre.
So, if you want your company to stay connected and save money at the same time, this tax deduction is a great reason to take affirmative action.
Sound Like Something You Want To Explore?
Want to save more than you spent on asset investments? The tax super-deduction is waiting for you, but only until the end of March this year. If you want to take advantage of the super deduction to reduce the cost of your new phone system, we can help.
Let’s talk and find out how you can save while you upgrade.