Time ticking on tax-breaks

The super-deduction tax break runs out in less than 12-months. This short guide from Bohle gives you the basics as well as food for thought on some qualifying options.

Furlough, bounce back loans – they’ve been and gone but one Government funded COVID-recovery scheme is still very much with us and that’s the catchily named, super-deduction tax break.

It offers glass processors (and other businesses) access to major tax breaks totalling tens of thousands of pounds, allowing them to offset capital investments against bigger tax savings but time is ticking.

  1. What is super-deduction relief?

The super-deduction scheme was launched by Chancellor Rishi Sunak on 1 April 2021 and allows companies to access a capital allowance of 130% on qualifying plant and machinery investments.

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 will run until the 31 March 2023.

  1. Why was it introduced?

The scheme was introduced to encourage UK companies to invest as part of the recovery from COVID but also to address lower levels of productivity inn UK businesses.

  1. What are qualifying expenditures

Capital investment must be in new and unused assets that qualify as main pool expenditure, subject to some specific exclusions including second-hand machinery and plant equipment.

Plant and machinery expenditure which is incurred under a hire purchase or similar contract must meet additional conditions to qualify for the super-deduction and special rate relief.

The scheme can’t be used to purchase machinery or plant to then lease on to third-parties.

  1. How much could I save?

In practical terms, the capital allowance of 130% would mean that, if you commit to spend £100,000 or on plant and equipment, you can deduct £130,000 from your taxable profits. With Corporation tax currently at 19%, that equates to a saving of £24,700.

  1. What could I buy as a glass processor?

There’s flexibility on what you can buy but given the focus of the scheme, investments which make your business more efficient are in practical terms, going to be easier to secure.

Sedimentors are one example. They can help you cut waste-water, improve tooling and deliver better edge-quality by keeping coolant cleaner, helping you to make long-term efficiency gains and increasing your profitability or capacity, as part of the process.

For example, the cost of cleaning or changing coolant quickly adds up. Using just 400 litres of water as part of your weekly cleaning cycle equates to a yearly water consumption of approx. 20,000 litres as well as high cost for its disposal.

Although a lot of glass processors rely on Centrifugal water cleaning systems, they can’t filter glass particles < 5 µm. This is something which, can over time, contribute to lower product quality and a build-up of concretion in machinery and tanks.

Suitable for a wide assortment of grinding, drilling and sawing glass equipment, Bohle sedimentors use a different approach.

A sophisticated and automated, multi-stage process removes contaminants from coolants and water. This includes filtering of glass particles of < 5 µm or less but doing so using far less energy.

Another key feature of Bohle’s range is that it uses a ‘bypass system’ for batch cleansing. This isolates water, coolant and flocculant, from the line during the cleaning process, completely eliminating the potential risk from flocculant contamination and tool damage – creating a closed system.

We’re offering a free 60 to 90-day trial of our sedimentor, all glass processors have tom do is cover installation charges and carriage, while we can also help glass processors, access the Super-Deduction Scheme.