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Tax Relief

Did you know that if you purchase a new fire alarm or security system before 31 March 2023, your purchase can be off-set against your Corporation Tax?

SUPER DEDUCTION TAX RELIEF ON COMMERCIAL FIRE ALARMS OR SECURITY SYSTEMS

This government scheme is called the Super Deduction Tax Rate of Relief.
The scheme has been introduced as a result of the drop in business investment following the COVID pandemic. The government wants to create an incentive for businesses to bring planned investments forward.

This is because they do not want companies to defer purchases in order to attract corporation tax relief at 25% as opposed to 19%, which is what it will be from April 2023. It’s all about getting business moving again.

As a business owner, it’s likely you’ll want to understand all you can about this before you invest in a new fire alarm or security system.

There’s a lot of information out there about this scheme, but much of it is full of jargon and ‘accountant speak’ and if we’re honest we were totally bamboozled trying to read it. So, now that we’ve got our heads around it, we’re going to explain to you – in a totally jargon-free way – how the Super Deduction Rate of Relief can save you money on your fire alarm or security system.

Explaining Tax Relief

Can you explain how the tax relief works in layman’s terms?

We’re not accountants, but we’ll certainly do our best.

Basically, if your company spends money on plant and machinery investments between 1st April 2021 and the end of March ’23, you can claim 130% capital allowances.

Capital allowances can be claimed on capital expenditure. And capital expenditure is anything you buy for your business that’s classed as a long-term investment. Examples of this are property, equipment, land, computers, software, as well as fire alarms or security systems, for that matter!

Not all capital expenditure qualifies for this scheme though – just those items that come under the category of plants and machinery.

CCTV - Tax Relief

What counts as plant and machinery for tax relief purposes?

If your capital expenditure purchase meets any of these criteria, it’s classed as plant and machinery, so you can claim capital allowance on it.

  • Anything that you buy to keep in your business (including fire alarm or security systems).
  • The cost of demolishing plant and machinery.
  • Parts of a building that are considered integral. These are known as ‘integral features.’
  • Certain fixtures, for example, fitted kitchens or bathroom suites.
  • Alterations to a building to install other plant and machinery – this does not include repairs.

Buildings

What does not count as plant and machinery

The following items aren’t counted as plant and machinery, so you can’t claim capital allowance on them.

  • Buildings, including doors, gates, shutters, mains water, and gas systems.
  • Land and structures. Examples of these are bridges and roads.
  • Items that are only used for business entertainment, for example, a karaoke machine or pool table.
  • If you lease something, you can’t count it as capital expenditure. So, if you buy a fire alarm or security system you can claim the Super Deduction Tax Relief. If you lease it, you cannot.

So I can claim the Super Deduction Rate of Relief on a new business fire alarm or security system?

Yes. As long as you buy it, not if you’re planning to lease it.
The Super Deduction Rate of Relief works by treating your company as though it has spent 30% more on capital expenditure than it actually has. So if you buy a fire alarm or security system for £10,000 the government will treat it as though you’ve spent £13,000 on capital expenditure.

If you multiply £13,000 by 19% (the amount of current tax relief), it equates to approximately £2,500 of tax relief. If you deferred your purchase until April 2023 to attract corporation tax relief at 25%, you’d spent the same amount, £10,000, but the super deduction would no longer be in effect. 25% of £10,000 is still £2,500.

Therefore, by investing in a fire alarm or security system now, you’ll get the same amount of tax relief for your company that you would if you deferred your planned purchase until April 2023.

Take advantage of the super deduction rate of relief to protect your business right away with a fire alarm or security system, rather than waiting until April 2023! Contact Centurion Fire & Security Ltd today for a quote.

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