The super deduction capital allowance is ending April 2023

Super deduction is a tax relief that allows businesses to claim 130% of the cost of certain investments in new machinery, as a deduction against their taxable profits. This means that for every £1 spent on qualifying investments, you can reduce your tax bill by an additional 30 pence. The super deduction is available for a limited time period and applies to investments made on or after April 1, 2021, and before April 1, 2023. The main caveat is you must be a business and not sole trader.

What is the purpose of the super deduction tax relief?

The then Chancellor of the Exchequer, Rishi Sunak, announced the super deduction capital allowance as a way for business owners to invest, in an effort to stimulate the economy. It is only for purchases within the 2-year window. The idea is to increase the investment into all types of businesses, that will then lead to a spike in productivity. 

What qualifies for super deduction tax relief?

There is a long list of technological equipment that could be accepted for the super deduction scheme, the ones most relevant for most businesses would be the technology you use for day-to-day operations.

Servers

The server is similar to a computer, but with the sole purpose of facilitating other computers on the network. The server acts as a central hub, where all types of data are stored and accessed. The super deduction scheme is in relation to the purchase of an onsite server. The server can be used in several ways, such as a file server, and a database server. The file server is where your company stores documents, invoices, images, and other assets related to the business. A database server is essentially the storage for where your clients’ data is held. The more data you hold on a client, the more storage you will require. 

Computers

The most common piece of equipment found in the office, computers enable your employees to be more productive, give access to internet-based services, and run the software used to run your business. Computers are used for word processing, CRM systems, editing, and much more. The computers you buy are eligible under the integral feature section, electrical systems. The term is broad, and encompasses a lot of devices.