Clock Ticks On IT Investment Tax Break

Scott Mordue

May 24, 2023

IT Services

Technology specialist issues 'Act Fast' message to businesses as clock ticks on IT investment tax break

Technology solutions specialist Avoira has urged businesses to act fast or risk losing out on the financial benefits of a new tax break.

The warning follows the introduction by Chancellor Jeremy Hunt of “full expensing”, a tax incentive designed to encourage investment in IT equipment, office furniture and other machinery.

Announced in the May budget, full expensing allows incorporated businesses to reclaim 100% of the cost of qualifying equipment from their pre-tax profits within the year they are purchased. Eligible kit includes computers, printers, chairs and desks.

The government reports that taking advantage of full expensing means companies can cut their taxes by 25p for every pound they invest. This is comparable to the savings offered under the previous “super deduction” scheme introduced as a post-pandemic investment booster.

The relief can also be claimed in one go, rather than being spread over annual write down allowances.

Unincorporated businesses and partnerships can secure the same tax relief on capital investments up to £1 million under the Annual Investment Allowance.

However, the full expensing is a time limited initiative, as Avoira’s managing director Andy Roberts explains.

As things stand, full expensing is a short-term measure which aims to level up average UK business investment with that of other members of the Organisation for Economic Cooperation and Development.

The 100% relief is scheduled to end in March 2026. This deadline, coupled with the inflationary pressures impacting the cost of IT equipment and the lead times necessary to specify and implement technology upgrades, means businesses should act fast.

Otherwise they may not reap the maximum financial benefit and lose a competitive edge as rivals take advantage of this break and invest in new, more efficient and productivity-enhancing kit.
Andrew Roberts, Avoira’s managing director

He also points out that the pace of technological advances in recent years means that companies should in any case review their IT infrastructures and equipment.

“Technology can age fast and failure to keep pace can undermine relative standards of service delivery, competitiveness and employee satisfaction.”

Companies interested in taking advantage of full expensing can contact Avoira for advice on the equipment that qualifies for tax relief.

Government guidance on full, expensing can be found by visiting Spring Budget 2023 – Full Expensing.