Save Money on your Business’s Office Furniture via the New Super-Deduction Tax Break
The UK Government’s new super-deduction £25bn tax break has been put in place by Rishi Sunak to increase business spending as well as encourage investment via providing 25p off company tax bills for every pound spent on items such as computer equipment, hardware tools such as drills, company vehicles such as tractors, lorries and vans and of course, office chairs and desks.
The super-deduction will offer 130% first year relief on office furniture as well as most other business equipment from April 1st 2021 until March 31st 2023.
An example of this would be a company spending £100,000 on qualifying business equipment, the corporation tax deduction would be £130,000, giving corporation tax relief at 19 percent of £130,00, which is £24,700. Usually, this amount would fall within the company’s annual investment allowance and give corporation tax relief at 18 percent, which would be £19,000, over £5000 less.
Office furniture, equipment and machinery investments made under a “hire purchase or similar contract” however, will have to meet additional conditions in order to qualify for the super-deduction.
These conditions include:
- You pay a periodical sum and in return the office equipment or machinery is hired to you.
- You eventually have the option to own those assets.
- The person who hires the assets is the one incurring the expenditure.
It must be noted however, that office chairs, office furniture and other equipment which is purchased second hand or used, is excluded from the super-deduction.
The main goal of the tax break is to encourage businesses to part with some of the £252bn in cumulative deposits that have built up throughout the pandemic. The super-deduction tax break is the “business equivalent of Eat Out to Help Out” states UK economist James Smith when interviewed by the Telegraph.
This is significant news for the furniture industry and the U.K. economy as a whole.