To buy or not to buy, that is the question.

As our focus on business growth continues, this week we look at investment in IT and whether you should do it now or after 1st April.

Before last week there was a countdown timer on the tax deduction called Super Deduction. It is a generous gift from the chancellor allowing 130% of the cost of IT equipment to be ofset against your corporation tax.

An announcement was made last year that this deduction would be ending on 31st March 2023 and so the countdown began.

However, during the budget last week the chancellor announced a new scheme called "Full Expensing" which allows 100% of the cost of IT equipment to be offset against corporation tax. Sounds like it is not quite as generous until you realise that corporation tax is also going up to 25% from 1st April.

As a result I thought I would run the numbers to find out the answer to the simple question "Should I buy IT equipment now or wait until 1st April"

The answer as always is.... "It depends". The increase in corporation tax is for companies that make more than ￡50,000 in profit. The full 25% corporation tax will be paid when a company makes more than ￡250,000 profit and between ￡50,000 and ￡250,000 there is a sliding scale.

So 100% full expensing offset against 25% corporation tax is marginally better than 130% Super Deduction offset against 19% corporation tax. However, for most small businesses a profit of ￡250,000 is a distant dream.

My article comparing Super Deduction and Full Expensing looks at examples and compares the savings to be made on each. For small businesses that are making ￡50,000 or less profit over the next 12 months Super Deduction is the best option and will gain you more savings.

As always, talk to your accountant as they are the experts. I am merely an IT nerd that happens to like helping businesses get great value.

Question: Were you aware of Super Deduction before this article?