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130% tax relief on new IT infrastructure?

by | Mar 30, 2021 | Article

If you invest in IT infrastructure, you can offset 130% of the net cost against that year’s Corporation Tax. This stems from the 130% Super-deduction announced in the Chancellor’s March Budget.

Here’s an example of how it works: If you invest £10,000 in core network switching, you can offset £13,000 against your profits for Corporation Tax in Year 1. So that’s 19% of £13k = £2,470 tax saving. Nearly 25%! Without the 130% Super-deduction, the tax saving would be 19%.

If you then sell that asset after 5 years for £2,000, that goes down as a profit so you pay 25% of £2,000 = £500 tax on that profit. An overall saving of £1,970. 

Bearing in mind that Corporation Tax is currently 19% and rises to 25% in March 2023, this is the Chancellor being clever to discourage you from delaying investment until then, and to help get the economy back on its feet. When corporation tax is 25%, you’ll naturally save 25% Corporation Tax anyway.

Data cabling and technical services can be included in the figures.

Disclaimer: I’m not an accountant, so please verify these facts with your Finance Manager before investing.

Tax deduction for data cabling infrastructure

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