If you’re an IT solution provider, you've likely seen the impact of high interest rates and inflation on your customers’ IT investment decisions and overall business growth plans. Many customers are watching their cashflows and committing to large-scale technology purchases can be challenging. In fact, according to the International Data Corporation, 2023 worldwide IT spending forecasts have been revised downwards to 4.4% compared to 6% in October 2022*.
However, if you have UK customers, there’s an allowance announced in the UK Government’s 2023 Spring Budget called “full expensing” that could help. Let’s explain how this and leasing can lend a hand.
Understanding “full expensing”
The UK government introduced “full expensing” to stimulate capital investments, including IT equipment. This means, dependent on the expenditure, businesses can deduct the value of their capital investments from their profits before corporation tax is calculated.
Why full expensing matters to your customers
Technology (i.e. servers and software) is often counted as “capital investments.” This means your customers could deduct the total cost of needed technology from their taxes.
For example, let’s say your customer needs to spend £100,000 on employee laptops. With the 2023 Budget, this means your customer could have a £100,000 tax deduction.
Where finance comes in
“If you’re thinking, a potential tax deduction is great, but my customers still don’t have the budget or expense alignment for upfront tech costs, that’s where payment solutions come in,” says Howard Dudley, Country Sales Manager for DLL’s Technology Solutions Team. “When it comes to full expensing, this means IT solution providers could partner with our financing experts to break down that upfront technology spend into affordable monthly, quarterly or annual payments. In the UK, lots of our IT partners use payment options so their customers can have the benefit of full expensing without breaking the budget.”