Budget - 100% CT offset small business investment on IT - do-able NOW?

solidpro

Hunt just announced that small businesses could claim 100% of the IT investment to offset their corporation tax. The end of our company's financial year is the end of this month. Does anyone know if this scheme counts immediately?

Jeremy535897

See https://www.gov.uk/government/publications/spring-budget-2023-factsheet-cutting-simplifying-tax-for-businesses-to-invest-and-grow/spring-budget-2023-media-factsheet-cutting-simplifying-tax-for-businesses-to-invest-and-grow

The expensing regime comes in from 1 April 2023, but the annual investment allowance for plant and machinery is already 100% for expenditure up to £1 million annually. What is the nature of your IT investment?

solidpro

I run a small IT company with my wife. We pay a lot of CT. We have spent nothing on IT investments this year but would like to buy a new laser printer and 2 new laptops... I keep hearing 'plant and machinery' but I am sure I heard Hunt say 'IT investment'....

[Deleted User]

solidpro said:

I run a small IT company with my wife. We pay a lot of CT. We have spent nothing on IT investments this year but would like to buy a new laser printer and 2 new laptops... I keep hearing 'plant and machinery' but I am sure I heard Hunt say 'IT investment'....

I would be be claiming 100% AIA on those as ‘plant and machinery’. 

https://www.gov.uk/capital-allowances/annual-investment-allowance

https://www.gov.uk/capital-allowances

Jeremy535897

solidpro said:

I run a small IT company with my wife. We pay a lot of CT. We have spent nothing on IT investments this year but would like to buy a new laser printer and 2 new laptops... I keep hearing 'plant and machinery' but I am sure I heard Hunt say 'IT investment'....

You can claim 100% AIA as purdyoaten says, as you won't be anywhere near the £1 million cap. Here's what he actually said:

"Business taxes

Let’s start with business taxation.

We know the importance of a competitive tax regime. We already have lower levels of business taxation than France, Germany, Italy or Japan.

But I want us to have the most pro-business pro-enterprise tax regime anywhere.

Even after the corporation tax rise this April, we will have the lowest headline rate in the G7.

Only 10% of companies will pay the full 25% rate.

But even at 19% our corporation tax regime did not incentivise investment as effectively as countries with higher headline rates.

The result is less capital investment and lower productivity than countries like France and Germany.

We have already taken measures to address this.

For larger businesses we have had the super deduction, introduced by my RHF the Prime Minister, which ends this month.

For smaller businesses we have increased the Annual Investment Allowance to £1 million, meaning 99% of all businesses can deduct the full value of all their investment from that year’s taxable profits.

If the super deduction was allowed to end without a replacement, we would have fallen down the international league tables for tax competitiveness and damaged growth.

I could not allow that to happen.

So today, I can announce that we will introduce a new policy of “full expensing” for the next three years, with an intention to make it permanent as soon as we can responsibly do so.

That means that every single pound a company invests in IT equipment, plant or machinery can be deducted in full and immediately from taxable profits.

It is a corporation tax cut worth an average of £9 billion a year for every year it is in place.

And its impact on our economy will be huge. The OBR says it will increase business investment by 3% for every year it is in place.

This decision makes us the only major European country with full expensing…

…and gives us the joint most generous capital allowance regime of any advanced economy."

See here regarding the super deduction currently available:

https://www.gov.uk/guidance/check-if-you-can-claim-super-deduction-or-special-rate-first-year-allowances

[Deleted User]

I have come across many who confuse ‘investing in IT’ with investing in equipment used in IT - e.g. a printer.

solidpro

So a printer, a couple of laptops, work phones and tablets are all good?

And a nice swivel office chair.

[Deleted User]

solidpro said:

So a printer, a couple of laptops, work phones and tablets are all good?

And a nice swivel office chair.

Yes - but it has been that way for many years now. Check what other equipment you may have purchased in this financial year.

Certainly, in one of the accountancy practices in which I worked, it was standard to contact clients just before their year end to review such matters.