Purchasing hardware is a large expenditure for a company, tending to mean that the assets are kept for a long period of time to make full use of the investment. But perhaps you didn’t know that you can sweat off the cost of these assets whilst still making use of the latest technology, through the use of Exponential-e’s cloud services.
The reason for this is that there can be tax write-off benefits when you choose to take cloud services rather than buying new hardware.The principle of this is moving your expenditure from one side of the balance sheet to the other; from Capital Expenditure (CAPEX) to Operational Expenditure (OPEX).
The difference between the two is as follows: as a profitable business you are allowed certain tax breaks or benefits before you submit your final amount of profits, on which you have to pay tax on. With CAPEX you are able to write off through depreciating assets 18% of the total spend on hardware in year one.
In year two you are able to write off 18% of the balance left over after the 18% deduction and in year three, the balance of year two less a further 18%.
A working example…
Year 1: £100,000 spent on hardware – £18,000 deducted off your tax liability
Year 2: £82,000 left in assets – £14,760 deducted off your tax liability
Year 3: £67,240 left in assets – £12,103.20 deducted off your tax liability
By year three your equipment would usually be replaced, meaning you would have only been able to write off 46% of your CAPEX. However, if you continue to sweat your assets for a further four years using the same logic as above, this would take you to 100%.
With OPEX the rules are different because you can write off 100% of these costs against your tax liability each and every year. When you buy a cloud service it is considered an OPEX expense, meaning that these tax benefits apply.
So, for example, when investing in any version of DaaS (Desktop as a Service) you can keep depreciating your assets up to the seven year maximum but still have access to the newest and fastest technology in our cloud service.
DaaS is a cloud service in which the back-end of a virtual desktop infrastructure is hosted by a cloud service provider, it has a multi-tenancy architecture and the service is purchased on a subscription basis. Aside from the financial benefits, our DaaS service can assist to reduce deployment complexity; improve management; increase security and compliance; and allow for superior end-user productivity.
By having the ability to get all your money back on your old hardware, by using this equipment as the access module to DaaS, you get the best of both worlds.