Super Deduction: Investing in your Veterinary Practice

author

Jack Peploe
Veterinary IT Expert
March 22, 2021

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Rishi Sunak announced the budget a couple of weeks ago and if you blinked you might have missed a very important detail.

Super Deduction!

In a nutshell, the super-deduction tax break means that you can claim 130 per cent of what you spend on equipment for your business against taxable profits!

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So how does super deduction work?

The government has only released very basic information so far and there are a lot of questions to still be answered. But from what they have said already it looks like for expenditure incurred for two years (from 1 April 2021 until the end of March 2023), companies can claim 130% capital allowances on qualifying plant and machinery investments.

In conversation with the Telegraph, UK Economist James Smith drew parallels between super deduction and Rishi’s well publicised ‘East out to Help Out’ scheme . The hope is that this ‘super deduction’ will encourage business to invest after a significant slump in business investment due to the Coronavirus pandemic.

In a statement HM Treasury explained that “Making capital allowance more generous works to stimulate business investment. As a result, these measures can promote economic growth and counter business cycles. The super-deduction will give companies a strong incentive to make additional investments, and to bring planned investments forward”

What’s included in ‘Qualifying Plant and Machinery’

According to the government information released, most tangible capital assets used in the course of a business are considered ‘plant and machinery’ for the purposes of claiming capital allowances. They have not produced an exhaustive list of exactly what qualifies (although they have made it clear that second hand assets will not be included), but for guidance the government have suggested the following assets that may qualify for the super-deduction:

  • Solar panels
  • Computer equipment and servers
  • Tractors, lorries, vans
  • Ladders, drills, cranes
  • Office chairs and desks
  • Electric vehicle charge points
  • Refrigeration units
  • Compressors
  • Foundry equipment

Example

The example given by HM Treasury and published as part of the super deduction guidance is as follows:

  • A company incurring £1m of qualifying expenditure decides to claim the super-deduction
  • Spending £1m on qualifying investments will mean the company can deduct £1.3m (130% of the initial investment) in computing its taxable profits
  • Deducting £1.3m from taxable profits will save the company up to 19% of that – or £247,000 – on its corporation tax bill.

Further guidance on eligibility criteria can be found here. However full technical guidance is yet to be released.

What This Means for Vets

This could be a very exciting way to afford the much needed IT infrastructure updates that you practice requires. For example:

  • New computers
  • New server
  • New printers or scanners
  • New tablets
  • Telephone systems (VoIP)
  • Webcams & microphones
  • Display boards
  • CCTV systems

If you would like help to understand where your practice could benefit, just book in a free consultation with one of our Veterinary IT Experts here.

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