Scots firms urged to act fast on tax break to modernise workspaces

Scottish businesses are being urged to make use of a generous tax break, to adapt their offices for hybrid working, ahead of a looming deadline.

A “super deduction” for major capital investments could see taxes cut by up to 25p for every £1 invested by businesses, according to experts at Scottish accountancy practice Douglas Home & Co.

They believe the potential 130 per cent tax deduction is ideal for businesses considering a post-Covid workplace revamp and calculate that a £1 million investment could see a tax saving of £247,000, compared with just £190,000 under the previous system. However, with the tax break due to close by the end of March 2023, businesses are being encouraged to act quickly to take advantage.

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Director Sheryl Macaulay believes the potential tax break has “flown under the radar”. She said: “It has been such a tumultuous year since it became available that many people have simply missed it.

“Countless firms are looking at how to reconfigure their offices and workplaces to make the best possible use of space as new hybrid working patterns become the norm. This super-deduction is absolutely perfect for that.”

The practice has taken advantage of the tax break for a major refurbishment of its newly purchased Hawick office to provide additional workspaces for 23 staff as well as creating a new hub in its headquarters in Kelso.

Ms Macaulay urged businesses keen to explore the possibilities to start preparing as soon as possible, given that major capital investments typically take time to plan and deliver.

Sheryl Macaulay, a director at accountancy firm Douglas Home & Co, believes companies should look at using the tax break. Picture: Ian Georgeson.

“While the super-deduction is still available for just over a year, business people know how quickly that time passes when you are talking about major capital investments. Those are not snap decisions and generally need extremely careful planning and decision-making,” she said.

“It will be a terrible waste of an opportunity for any business which is definitely going to have a major, post-Covid refurbishment of its workplace, but misses out on this.”

The super-deduction is the main element of a range of capital allowance incentives launched by the UK government in April 2021 to boost business investment. While building structures are not included, the deduction can cover fixtures and fittings such as computer equipment, office chairs and desks, toilets, and kitchen areas.

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