The Super Tax Deduction Scheme Focuses on IT

What is the Super Deduction Tax Scheme?

The scheme allows businesses to claim 130% of the cost of investments in certain types of equipment against their taxable profits, resulting in a tax reduction of up to 25p for every £1 they invest in eligible equipment.

This is the biggest two-year tax cut in modern British history, but time is running out to benefit with the scheme set to end on 31st March 2023.

What type of expenditure qualifies?

The scheme is available to all companies that pay corporation tax, regardless of size, and applies to investments made between 1st April 2021 and 31st March 2023.
Items that can qualify for the Super Deduction Tax Scheme can include IT equipment such as:

• Computers/laptops
• Printers
• Software
• Telecommunications systems

In addition to IT equipment, the Super Deduction Tax Scheme also applies to traditional plant and machinery equipment such as machinery, tools, industrial equipment, and certain business vehicles.

User example:

To use a similar example as the one described in the video above, a company spending £10,000 on new computer equipment would be able to claim a deduction of £13,000, resulting in a tax saving of £2,470.

To check other items that may qualify, please read the guidance on super deduction on the gov.uk website

What else do you need to know?

At the time of purchase, the equipment must be new and paid for in full, and it must be used for business purposes. From a tax planning perspective, cash, credit cards and finance options can be used as long as the same tax allowances apply as if you were paying cash. We recommend speaking to your Financial Advisor to discuss the best payment option for your business.