Buying a CCTV system outright can save you money with ‘Super Deduction’

As a result of the decline in business investments over the past two years during the COVID-19 pandemic, the government have introduced a scheme call the ‘Super Deduction Tax Rate of Relief’. Rather than deferring purchases to 2023, when corporation tax relief will become 25%, the government are using the Super Deduction scheme as an incentive for businesses to invest now, rather than later and even bring planned purchases forward.


Claim up to 130% back in capital allowance on plant and machinery investments until April 2023


Security systems fall under the bracket of ‘plant and machinery’, as they are deemed a permanent fixture in your business and therefore, a long-term investment. This means that they are classed as capital expenditure and meet the criteria for the ‘Super Deduction Rate of Relief’ scheme, which is in effect until March 2023.

To put it simply, this works by treating your company as though it has spent 30% more on capital expenditure than it actually has.


As an example: if you buy your IP CCTV system for £10,000, it will be treated as though you’ve spent £13,000 on capital expenditure.


If you multiply £13,000 by 19%, which is the current rate of tax relief, it equates to approximately £2,500. If you deferred your purchase until April 2023, in order to attract corporation tax relief at 25%, you would be spending the same £10,000 on your CCTV system, meaning £2,500 in savings.

Many commercial clients lease their equipment to help with year-to-year budgets but, in the long run, the interest on certain lease agreements can inflate the cost of the system greatly. Additionally, if the equipment is leased, it is not counted as capital expenditure and the cost will not be included under the government scheme. This could mean that buying your system outright works out to be the most cost effective in the long run.

 

If you’re looking to take advantage of the government tax relief scheme and protect your business now, contact Watch Systems Limited here for a free evaluation and site survey.

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