Could investment in new machinery and equipment qualify you for a tax break?

Tax breaks for qualifying capital investment could significantly reduce the cost of equipment purchases. Glass Times talks to Bohle’s Dave Broxton.

Furlough, stamp duty holidays, and bounce back loans have been instrumental in keeping UK businesses afloat, as well as driving the boom we’re seeing in home improvement.

Another tool to help combat the effects of the coronavirus pandemic is the ‘super-deduction’.

Announced in the recent budget, it allows companies to claim a deduction in their tax bill if they invest in new plant and machinery.

“Under the scheme you get a capital allowance of 130% on qualifying plant and machinery investments,” Dave Broxton, managing director of Bohle, said.

“So, in practical terms, say as a glass processor, you commit to spend £100,000 or thereabouts on a plant and equipment, you can deduct £130,000 from your taxable profits.

“With corporation tax at 19%, that equates to a saving of £24,700.

“It doesn’t only apply to machinery like sedimentors, which deliver lifetime savings anyway. It also applies to lifting and handling equipment, among other capital equipment investments, making the coming months a perfect time to invest in upgrading your kit.”

Prior to this this, capital investments would either fall within a company’s annual investment allowance and produce relief of only £19,000, or alternatively be tax-relieved at 18% of the cost per annum.

The scheme was launched on April 1, and will run until the March 31, 2023. The idea is that it will encourage businesses to invest in equipment and productivity, which may otherwise have been delayed.

Rishi Sunak said he believed super-deduction corporation tax relief will not only bring forward business spending for two years but “will increase the amount of investment as well”.

Dave said: “Put simply, it allows you to significantly reduce the payback time on a wide range of investments, not least machinery and equipment. Given the limited window that the super-deduction will be applied to, glass processors really should be running with this.”

Bohle’s flagship plant offer is its range of sedimentors and coolant treatment systems which, as Dave points out, already pay back in improved edge quality and productivity.

“Clean water, especially with added coolant increases the performance of machinery by up to 20% and the service life of tools by up to 30%, but it can all too easily become contaminated with particles from drilling, polishing and grinding.

“You can lose man hours and see product quality deteriorate, which made a strong case for investment anyway but if you can now offset more of that against tax saving around £7,500, it cuts payback time even further.”

The new LiftMaster Quadro is another super-deduction qualifying product from Bohle. The automatic vacuum lifting system, combines the capability to safely handle weights of up to 800kg, with ease of operation and almost infinite degree of flexibility.

Fully tested to the European Standard for lifting systems EN13155, it’s built around a dual-circuit vacuum system which means the Liftmaster Quadro also doubles up on safety, so if vacuum is lost on one circuit, the second will support the load.

“If I was in manufacture, I’d be talking to my accountant right now,” Dave said. “Most businesses will have a two-to-three-year investment strategy. Bringing some of that forward delivers significant tax breaks as well as delivering the efficiency and product quality gains that can support your business’ growth into the future.”