Budget 2025 introduced a new tax incentive — the “Investment Boost” — designed to encourage businesses to invest in new assets. But is it a good fit for hospitality? Here’s what you need to know.
What is the Investment Boost?
The “Investment Boost” gives businesses a 20% deduction in the year they first use an eligible new asset — on top of normal depreciation. It applies from 22 May 2025 and has no cap on asset value or quantity.
Eligible assets include:
- New equipment (e.g. coffee machines, dishwashers, commercial ovens)
- New vehicles (e.g. delivery vans)
- New commercial or industrial buildings (e.g. refitting a kitchen, upgrading dining areas)
Why It Could Work Well for Hospitality
- Immediate Tax Relief
If you’re planning to upgrade or expand, this can significantly reduce your taxable income in the same financial year — boosting cash flow. - No Cap on Spend
Whether you’re a small café buying a new fridge or a large operator building a new site, you can claim — no maximum limit. - Building Improvements Count
Hospitality businesses often invest in physical upgrades, which aren’t always eligible under other schemes — but they are here. - Can Encourage Smart Investment
If you’ve been delaying big purchases, this could be the nudge to invest in more energy-efficient or higher-capacity equipment that improves service and margins.
But There Are Some Considerations
- Cash Upfront Still Needed
The boost gives you a tax deduction, not a grant — so you still need to spend the money first, which could be a barrier if cash flow is tight. - Doesn’t Apply to Second-Hand Assets
Many hospitality businesses look for good quality second-hand gear — but only new assets are eligible. - Timing Matters
To claim the extra deduction, the asset must be first used or available for use after 22 May 2025. If you’re already mid-upgrade, your spend might not qualify. - Buildings Must Be New
Renovating or extending an existing building may not be eligible unless it qualifies as a new build under depreciation rules — check with your accountant.
The Bottom Line
If the timing is right for you then the Investment Boost offers a financial upside. But it won’t solve all the sector’s challenges, and the benefits depend on your ability to spend up front and claim through your tax return.