Full Expensing: A Gateway to Smarter Software Investment

App Development
Feb 29, 2024
3 minute read

At Bad Dino we’re always on the lookout for ways to reduce the costs of app development when it comes to startups or existing businesses looking to do some digital transformation (read: turn those big complicated spreadsheets into proper business tools!). A few of our clients are taking advantage of the ‘full expensing’ tax break that has been in play for a few years now. It’s not something everyone has heard of, so here is some high level info on what it is and how it may benefit your next app development project.

What is it?

In the Autumn Statement, Jeremy Hunt announced that full expensing for (some) plant and machinery will be made permanent. Full expensing allows UK companies to deduct the total cost of new & unused plant and machinery from their taxable profits in the year of purchase. In fact, full expensing allows companies to write off 100% of the cost of investment in qualifying plant and machinery in one go – equivalent to a tax saving of up to 25p for every £1 spent. There is no minimum or maximum amount of investment, and businesses can claim full expensing relief on all qualifying expenditures…. But did you know this also includes web or mobile app development? 

Now, while full expensing can include software, there are a couple of hoops to jump through for software to qualify as eligible under the scheme. It must be considered as capital expenditure (capex), and also needs to be more than just a one-off purchase—it should provide lasting benefits to your business, beyond a mere year. Whether it's off-the-shelf solutions or bespoke software tailored to your unique needs, if it's adding long-term value, you're on the right track.

Expenditure on software which did not previously exist in your business  can be categorised as capex, and therefore fully expensed. As an example, we often have businesses approach us with a complicated spreadsheet in Microsoft Excel that’s basically running their business or at least a department of it. We take on these types of challenges and build a custom piece of software that is more fit-for-purpose and provides them with a far better framework going forward to build upon - usually freeing up admin time for the team to get on with more important tasks. These types of projects should typically qualify under full expensing. 

How Bad Dino can help:

We’ve been building apps for over 10 years now and we’ve worked with startups, SME’s and large organisations to innovate within their industry. Sometimes that can mean taking a slow, manual process that everyone hates and seeing how software can help out - sometimes that’s an off the shelf solution but can often be bespoke. That’s where we come in - we’ll do a deep dive into it during a planning & strategy phase, scope out everything that you need to solve the problem and put together a fully costed proposal for you, ready to get started. Get in touch with our team and let’s start the conversation today.

Disclaimer: The content on this post does not constitute professional financial advice. Readers should consult with the relevant professionals for specific advice related to their situation.

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