Super Deduction Tax Break

The Super Deduction Tax break – what it means for upgrading your IT infrastructure.

  • IBM

In March 2021 Rishi Sunak announced the Super Deduction Tax Break which will be in place until March 2023.

Physical IT hardware such as computers and servers are recognised as plant and machinery by HMRC. Software such as accounting software and EPOS software also qualify under the guidance. In addition, the costs associated with bringing the IT or software investment into operation can also be included such as the professional service costs of an engineer or consultant.

There are some costs associated with an IT or software project that may not qualify such as on-going support fees or software subscriptions. Whilst it is best to check with your finance team/accountants, in most cases that the vast majority of spend on an IT or software project will qualify.

This could save your business a significant amount on any IT investment made. Before March 2021 you could only deduct 18% of an investment against corporation tax but with this new super deduction you can deduct 130% of the total investment against tax. As an approximation this would save a company 25p of every £1 invested in NEW equipment such as IT Infrastructure.

This means that an investment of £100,000 on new computer equipment will only cost the business £75,000 over the next two financial years. As always, Recarta can get you the very best prices and services on IBM, HPE & Lenovo solutions. For servers, storage or network upgrades, using the Super deduction Tax break will make the business case even better.

To find out more contact your Recarta Account Manager.