Does the UK’s super-deduction tax scheme favour on-premise infrastructure investments in the short-term?

Anil Mudumbi
October 11, 2023
Share this post


UK-based companies are possibly better off investing in on-premise infrastructure than IaaS-type Cloud infrastructure until 2023 due to the tax benefits included within the super-deduction scheme announced by the Chancellor in Mar ’21.


As part of the Budget 2021, the Chancellor, Rishi Sunak, announced a new capital allowance ‘super-deduction’ and first year allowance. The hope is that these will provide companies a stronger incentive to make qualifying investments and bring forward planned investments for future years.

Link to the full details on UK Government website can be found here.


In theory, as the tax break is on Capital expenditure, one can write off such investment against taxable profits. The allowance effectively allows a company to write off 130% of the capital value and it’s all up front. It would, in theory suggest, a tax benefit over the rental model where tax deductibility is based on 100% of the in year subscription only. So could take 5 years to get the deductions and only up to 100% of the value.

Key extract “The 50% first-year allowance (FYA) for special rate (including long life) assets until 31 March 2023 for companies. The kinds of assets which may qualify for either the super-deduction or the 50% FYA include, but are not limited to: • Computer equipment and servers”

Obviously, it’s needs to be looked at on a case-by-case basis with the support of a tax specialist.

If we're wrong, we'd welcome input on what we're missing.

Request custom demo

If you would like to understand our product better select from one of the options

Somewhat unsure? arrange a quick clarification call
Understand solution - and would like to see the detail?
An initial call that covers a quick overview and understand your needs to determine if there is a solution fit
A full Product Demo tailored to your specific needs covering data aspects and business case
By clicking “Accept All Cookies”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. View our Privacy Policy for more information.