What government incentives are there to support the cost of my office fit-out?

Flexibility is a growing priority when it comes to financing an office fit-out, and there are methods which correspond with the differing needs of your business. Whilst paying from capital funds means paying the cost in one large sum, it does require the availability of the cash, in comparison to methods such as leasing or loaning from the bank. Both of these options allow you to pay the money back in monthly repayments allowing an evenly distributed cash flow throughout the year.

Aside from these financing methods, which we’ve previously discussed in the blog: The best ways to finance an office fit-out, we also encourage our clients to consider the various incentives provided by the government to help ease the cost of the office fit-out.

The most common incentives include the energy capital allowance scheme and the super deduction tax break. Whilst it is not a government incentive as such, considering how to reduce the requirement to pay the landfill tax is also a good opportunity to save some unnecessary costs when embarking on an office refurbishment.

ENERGY CAPITAL ALLOWANCE SCHEME

To encourage the use of energy-efficient items, the government have provided a scheme where you can claim capital allowances (reduction in tax) if you buy low or zero carbon, or energy efficient technology for your business. Items included on the energy technology product list or ETPL which currently qualify under the scheme include:

  • Boilers
  • Pipework insulation
  • Lighting and controls
  • Hand air dryers
  • Combined heat and power sources
  • Warm air heaters
  • Solar panels
  • Office chairs and desks
  • Refrigeration units
  • Computer equipment and servers

The scheme allows for the claiming back of 100% of the cost of the qualifying equipment against taxable profits, in the first year.

SUPER DEDUCTION TAX BREAK (SDTB)

The SDTB will allow companies, until 31st March 2023, a 130% first-year capital allowance for new equipment, plant and machinery assets. This allows businesses for every £1 invested, to reduce their tax bill by up to 25p. These allowances work alongside the ongoing Annual Investment Allowance, which allows for a 100% deduction of the cost of new plant and machinery assets from their taxable profit, in the initial tax year of purchase.

The following qualify for the SDTB:

Unfortunately, partnerships and sole traders don’t qualify for this scheme and neither do business that don’t pay corporation tax.

LANDFILL TAX SAVINGS

Whilst this is not a government saving initiative, it is a good reminder of the need to recycle as much as possible, and in doing so significant amounts of cost can be saved. The standard rate for sending waste to landfill is £69.70 per tonne, and when sending large amounts to landfill, this very quickly adds up! You can save money whilst saving the planet and keeping a clear conscience.

In conclusion, these government incentives are very helpful and should be taken advantage of and utilised in the financing of an office fit-out throughout what may be a period of uncertainty due to different external factors.