Why machinery matters for chancellor’s super tax break
The government has introduced an unprecedented £25 billion business tax cut to help kick start economic recovery. Joe Hague, managing director at Promac, explains why that makes it the perfect time to invest in new equipment.
Many businesses will be looking to keep a tight control over spending as we face a potentially uncertain few years in the aftermath of the pandemic. However, due to the recent announcement of a tax super deduction, there’s never been a better time to buy new machinery.
From April, Rishi Sunak is introducing a new 130% capital allowance for businesses investing in qualifying plant and machinery. Combined with a 50% first-year allowance for qualifying special rate assets, the chancellor has called it the biggest business tax cut in modern times.
This news couldn’t come at a better time for our industry. Fenestration bounced back from the lockdown in a very healthy fashion, although the widespread issues over supply didn’t help as fabricators attempted to clear the inevitable back log of orders created by the downtime.
With those issues now largely dealt with, and factories adapted to cater for social distancing rules and enhanced safety regulations, fabricators and IGU manufacturers are slowly returning to pre-lockdown production levels, while product demand in our sector is showing no signs of slowing down anytime soon.
As we know, downtime is the biggest enemy to productivity and Covid has proved to be the ultimate adversary. However, one positive to take from the first lockdown was that it provided the opportunity and the time to think. It’s easy to get lost in the day-to-day business and it can be difficult to take a step back to see the wood from the trees.
With manufacturing grinding to a temporary standstill, it gave business owners, ops directors and factory managers the chance to really consider how efficiency could be improved and what machinery would help to achieve this.
Whether it’s a small addition to your production line to plug a gap and improve throughput, or you’re looking at ways that you can futureproof your business and integrate a higher level of automation, this massive tax incentive from the government means that now is an ideal time to put those plans into place.
Investment has always been key to improving efficiency and profitability. This new super deduction will cut companies’ tax bills by 25p for every pound that they invest in new equipment.
For example, under the existing rules, a fabricator investing £1 million in new machinery could reduce their taxable income in the year they invest by £260,000. With this super deduction, they can now reduce it by £1.3 million.
This provides an unprecedented opportunity for fabricators and IGU manufacturers to make major improvements to their facilities over the next two years, while this incentive is in place. The key to making the right improvements and investing wisely is working with the right machinery partner.
After more than 40 years in the industry, we thought we’d seen it all. Although 2020 has proved that isn’t quite the case, our long legacy does mean that we have the knowledge to give expert advice on the right machinery and software to invest in.
We work in factories. We understand how they work and the issues you face on a daily basis. We can provide fresh eyes and a different perspective on how you can streamline your processes and what machinery will work best to achieve this.
By working in partnership with Promac, we can take care of all your machinery matters.