Super-deduction: grab it while you can

Neil Parton
Neil Parton

By Neil Parton, managing director, Elumatec

As I’m writing, it’s a little over six months before the end of the Government’s super-deduction scheme which was introduced to boost investment in plant and machinery by using tax incentives.

With a deadline of 31 March 2023, if you’re going to take advantage of the scheme, you need to get cracking.

If you’re like a lot of people, and are unsure how this super-deduction scheme works, here’s the essentials you need to know.

What is super-deduction?

The Government recognises that many manufacturing businesses in the UK are held back by a lack of investment.

While capital expenditure is not deductible in arriving at your taxable profits, capital allowances are.

Imagine you spend £100,000 which qualifies for 100% Annual Investment Allowance. At a corporation Tax rate of 19%, you would be able to deduct £19,000 from your tax bill. However, under the super-deduction scheme you can claim 130% first-year relief on qualifying purchases – that’s 19% of £130,000 or £24,700 instead of the normal £19,000.

Let’s be clear, your investment outlay is the same but if you buy before 31 March 2023, you’ll save a tidy sum in corporation tax.

That’s the basic information. There are one or two complications regarding what counts as qualifying expenditure, but most plant and machinery purchases fit the bill. It’s also worth knowing that the scheme only applies to corporations. Partnerships and sole traders don’t qualify.

Of course, the sooner you acquire new plant and machinery, the sooner you benefit from its use. And as we all know, with costs of materials, consumables and power all escalating, it’s more important than ever before to operate efficiently and cost effectively. When you make sound decisions about acquisitions, the payback can be remarkably fast.

That’s one of the reasons we are very excited about the latest addition to the Elumatec CNC range. The SBZ 118 is an entry-level profile machining centre that’s very affordable – even more so with the benefit of super-deduction – but which packs a big punch in terms of its performance.

It’s ideal if you’re just moving up to CNC production, if you’re growing and need extra capacity, or if you’re adding another product line to your offering. While it would be a genuine asset in almost any operation, it’s a perfect option for modestly sized businesses looking for speed, accuracy and cost-effective machining.

Any investment needs consideration, even while there’s a generous tax break on offer, but we know this machine will deliver satisfaction long term. It’s compact, with a tidy footprint and a tidy, ergonomic design but has the capability, with its 5Kw spindle to process profile lengths of up to 6m.

What’s more, it’s ideal for PVC or aluminium. In other words, even in changing and challenging times, it’s a machine that will always be an asset, long after it’s paid for itself.

Super-deduction only applies to purchases of new equipment and the SBZ 118 qualifies. I like to think it’s the kind of machine the Government had in mind when it launched its £25bn investment initiative. It’s up-to-the-minute, high-quality engineering incorporating the best CNC technology – just what UK industries need to thrive.

The deadline is looming

Now if I’ve whetted your appetite for new machinery with a potted description of a superb new machine, I want to urge you to act. Like most schemes there are some crucial details.

For example, you must have purchased the machine and have had it delivered by the deadline, not just placed an order. Whether it’s our machine, a new saw, a new welder or any other item of qualifying expenditure, please don’t wait.

The clock’s ticking. Don’t miss that deadline.

Elumatec
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