Computer tax relief

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Computer tax relief – New temporary tax reliefs on qualifying capital asset investments from 1 April 2021

The Chancellor recently announced an extension to the super-deduction corporation tax relief measure, effectively providing computer tax relief.

This means when you purchase (not lease) qualifying investments you can claim 130% tax relief on them until 1st April 2023. This means you should be able to obtain computer tax relief on any computer systems you purchase until that date.

Of course, you should check the position with your accountant before claiming computer tax relief.

So, don’t delay, now’s a great time to commence your computer system upgrades!

You can read the full report from HMRC here.

What you should consider for your IT systems

First and foremost you should review your computer server and determine if it is time to upgrade. If you are still operating on Windows server 2012 then you really have no choice, since this will soon be out of support by Microsoft. Notwithstanding that, if your server is (or will be) 5 or more years old, it’s really time to consider a new one.

Associated with servers is network equipment. Lead times for this equipment, notably switches, are hugely problematic. You should plan on a 6-month lead-time. That means you should start planning now if you wish to have your new IT system in place before the April 2023 deadline.

Finally, you should consider upgrading all your PCs and Laptops. If they are still operating on Windows 10, keep in mind that Microsoft will end support for Windows 10 in 2025. At that point you will need to upgrade to Windows 11. Note that in order to run Windows 11, PCs require a minimum hardware specification. So it is worth considering making the change to Windows 11 now.

Excerpts from the report

General description of the measure

This measure will temporarily introduce increased relief for expenditure on plant and machinery. For qualifying expenditures incurred from 1 April 2021 up to and including 31 March 2023, companies can claim in the period of investment:

  • a super-deduction providing allowances of 130% on most new plant and machinery investments that ordinarily qualify for 18% primary rate writing down allowances
  • a first-year allowance of 50% on most new plant and machinery investments that ordinarily qualify for 6% special rate writing down allowances

Policy objective

This measure is designed to stimulate business investment. It does so by increasing the incentive to invest in plant and machinery by offering higher rates of relief than were previously available.

 

Fresh Mango Technologies Jim Robot