A Castle Donington firm is urging businesses to upgrade ageing IT equipment this year or risk being hit by rocketing prices and the removal of Government tax incentives.
The warning by True MSP follows the introduction in Chancellor Jeremy Hunt’s spring budget of a new tax incentive for companies that invest in IT equipment.
The three-year-long policy, which triggered on 1 April and ends on 31 March 2026, means that companies will receive 100 per cent first year tax relief on the full value of qualifying equipment they purchase.
Critics claim the deal is not as generous as the previous two-year ‘super deduction’ policy brought in by Rishi Sunak during the Covid-19 pandemic, which essentially provided a 130 per cent tax relief. But the new budget policy enables firms to get their money back far quicker.
Nevertheless, Neil Shaw, co-founder of IT services provider True MSP, said that firms must ‘act now’ rather than later - not only to ensure they qualify for tax relief in the three-year window, but to also offset the rapidly rising cost of IT equipment.
“While we welcome continued Government incentives to encourage companies to advance through investment in IT equipment, there are some caveats,” said Neil.
“Many organisations tend to limp on as long as they can with ageing equipment, not recognising the adverse effects this can have on production efficiency and staff morale.
“But what many are also unaware of is the steep rise in the cost of IT equipment that is beginning to hit us all quite hard.
“Combine this with the relatively short three-year period for companies to agree and implement what could be a hefty capital expenditure, firms that don’t act now are likely to lose any benefit that this tax incentive provides. I strongly urge them to replace things like PCs, laptops and servers this year.”
Neil said that the cost of labour in China had doubled in recent years which, alongside certain raw material shortages and associated inflation, meant the price of essential IT hardware like computer chips was rocketing.
India is currently recognised as having the world’s cheapest labour market, but it is still relatively inexperienced in the manufacture of IT equipment compared with a global monolith like China, so cannot yet fully step into China’s shoes.
“We’ve seen the cost of comparable laptops rise from around £400 to £700 in just two years,” said Neil.
“While the global economic experts are estimating that inflation will return to a reasonable level within about 18 months, things are going to continue getting more expensive meanwhile, and we do not envisage any sudden price drops in the future.
“People need to take advantage of whatever incentives the Government is offering, and make sure they do so before any gain is wiped out by rising prices.”
He said that associated business IT costs, such as software, were also rising exponentially, often as a result of subscription-based pricing dictated by the global software giants.
True MSP, launched by Neil Shaw and Tim Rookes, has recently signed its 100th client and reports that the majority of those clients significantly increased their spend on IT equipment over the last year to take advantage of the previous ‘super deduction’ incentive that Jeremy Hunt’s spring budget replaced.
The firm provides business IT support services such as cyber security, troubleshooting and hardware management to a wide range of companies including accountants, solicitors, retailers, manufacturing and engineering firms.
To discover more, visit www.truemsp.co.uk.