What is the new "full expensing" regime?

The government are replacing the super-deduction tax relief scheme that ended in March 2023, with the permanent “full expensing” tax break regime. 

All businesses will now have the opportunity to claim 100% capital allowances for investments in plant and machinery. This regime, known as full expensing, will allow companies to deduct the full cost of their investment in one go, resulting in a tax cut of up to 25p for every pound spent. 

How IT software and hardware purchases are covered

Following the announcement from the UK Government that businesses will be able to use the full expensing regime to reduce their tax bill, Orderwise is pleased to confirm that in most cases, spend on IT equipment, software and implementation services will be eligible, covering the vast majority of our products and services.

What is covered by the full expensing regime?

HMRC has set out detailed guidelines on what can be classed as qualifying expenditure, but to summarise:

◽ All Orderwise software is covered under HMRC guidance, including our online store and trade portal.
Physical IT equipment, including servers, computers, handheld devices and EPOS terminals are all recognised as plant and machinery by the HMRC, and this also qualifies them for the super-deduction criteria.
In addition, initial implementation costs for Orderwise, such as project implementation fees as well as custom integrations and developments,  can also be included under the guidance.

The 'full expensing' regime has now been extended beyond the initial three-year period announced in March and will now act as a permanent UK tax break on capital investment. 

Companies that are subject to Corporation Tax can get a deduction for 100% of qualifying expenditure when they buy new, unused plant or machinery. Unincorporated businesses cannot use this deduction, but can use the AIA which gives similar benefits on investments up to £1 million a year. For "special rate" assets, companies can only get a 50% deduction for the first year and 6% for following years.

The UK full expensing regime and the super deduction are two different tax policies introduced by the UK government to encourage businesses to invest in new equipment and technology.

The UK full expensing regime allows businesses to deduct the full cost of qualifying capital assets from their taxable profits in the year they are purchased. This means that businesses can immediately offset the cost of the asset against their taxable income, rather than spreading the deduction over several years through depreciation.

The super deduction scheme that has now come to an end, allowed businesses to claim a deduction equal to 130% of the cost of qualifying capital assets against their taxable profits. This meant that businesses could deduct more than the actual cost of the asset, providing a greater tax incentive for investment.

The main difference between the two policies is the amount of tax relief they provide. While the full expensing regime allows businesses to deduct the full cost of the asset, the super deduction provided a more generous tax relief by allowing businesses to claim a deduction of 130% of the cost.


What could an Orderwise investment look like?

Sam Turner & Sons Ltd.

👩🏽‍🤝‍🧑🏻 100,000 additional active customers
📈  20% increase in annual turnover
💻 570% increase in monthly online orders

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The Wright Buy

💸 £20,000 annual cost savings
📈 242% increase in annual turnover
🚚 9 hours a day saved on courier management

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📦 25% increase in weekly order processing
📈 30 % increase in year-on-year outbound orders
👷 110K orders despatched a year with just 5 staff

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