Save tax, make more

Dave Broxton, managing director of Bohle, explains how strategic investment can help glass processors increase capacity and meet demand, while saving tax and delivering long-term efficiency gains

It’s been no walk in the park, but Covid has been good for the home improvement sector. Record levels of activity in the housing market, fiscal stimulus, retention of jobs and, with limited options to spend their cash, homeowners have invested in their properties, driving huge demand for glass products.

That means a lot of companies are looking at record years. These, however, come with higher tax, which is why capital investment makes a lot of sense – especially when there are tax breaks available to help you make it.

There is a long-term issue with UK productivity compared to other developed nations. The government wants to address this, as well as making sure businesses come back from Covid stronger and better run, so it’s putting tax breaks on the table to get companies to invest.

The ‘stick’ is almost more of an incentive: if you’ve made big profits this year, the tax man is going to want his cut, and no matter how creative your accountant is, there are a lot of people who are going to face some big bills.

There is, however, an opportunity to invest that money, lower tax bills, and build a better business, while meeting the current high levels of demand.

The main break for business is the Super Deduction. It was announced in this year’s budget and allows companies to claim a deduction in their tax bill if they invest in new plant and machinery.

This includes a capital allowance of 130% on qualifying plant and machinery investments. In practical terms, if you commit to spend £100,000 on a plant and equipment, you can deduct £130,000 from your taxable profits. With Corporation Tax at 19%, that would equate to a saving of £24,700.

It’s an instant saving, which you’re only going to be able to access until March 2023. On top of that there are glass processors who are currently wondering where to put their money, especially when many have been sweating machinery.

There are also some very affordable and accessible investment options which can help them take advantage of demand and boost capacity, allowing them to take advantage of the still high levels of demand seen in home improvement.

This is a missed opportunity for many glass processors, and our sedimentors are a case in point. A relatively small investment, they can deliver an uplift in capacity on straightline edgers of up to 15%, allowing glass processors to make more hay while the sun shines, build long term efficiencies into their manufacturing models, and tap into the current round of tax breaks.

Time lost in downtime, machinery cleaning, cleaning of water tanks and the costs of wastewater disposal contaminated with glass particles in glass processing can run into £thousands each year.

If you can get a further 15% capacity out of your existing lines, allowing you to manufacture more, benefit from those efficiencies long-term, and save yourself a stack of tax, why wouldn’t you?

Suitable for elementary to chain-linked, double-sided straight line edgers, Bohle manufactures and supplies three different sedimentors: the 2.4, which has a filling quantity of 2,100 litres, the 1.0, (1,000 litres) and the 0.3, which has a filling capacity of 320 litres.

The fully automated system uses a sophisticated multi-stage process to pump water, first into a settling tank, removing around 70% of heavier glass particles from coolant.

Powdered flocculant is added and mixed using a programme of currents, which then bonds to the remaining glass particles, making them sink.

At the end of the cleaning process, a valve at the floor of the tank opens and the accumulated sludge is flushed into a filter bag by the water pressure. This leaves the cleaned cooling water ready to be returned into the cooling circuit.

We’ve done studies that show that clean cooling water increases the performance of machinery by up to 20% and the service life of tools by up to 30%, delivering additional through life savings.

In short, it’s a very good time to invest in machinery. But if you’re smart about, there are investments out there that can support you in capitalising on opportunities right now, as well as delivering long-term efficiency gains.