Tax break offers ‘free money’
The chancellor’s Super Deduction Tax, which gives businesses a capital allowance of 130% in the first year on any investments they make in qualifying plant and machinery, has been welcomed by Emmegi.
Ian Latimer, Emmegi (UK)’s managing director, said: “Effectively, it means that for every £10,000 spent on machinery, there’s a saving of £2,500 on the corporation tax bill, compared with £1,800 using the existing writing down allowances. If you consider there’s no upper limit on how much you can invest, then it’s potentially a pretty big incentive.
“The Super Deduction Tax was obviously introduced by the government to try to stimulate business investment, which reportedly fell by almost 12% between October 2019 and October 2020, and encourage businesses to bring forward any of their planned spending. It applies to new plant and machinery ordered between April 1 2021 and March 31 2023 but can’t be used retrospectively or for second-hand purchases.”
Despite the value this tax incentive offers, Ian said Emmegi didn’t see any meaningful fall in investment last year apart from at the very start of the first lockdown.
“There’s an argument that it is likely to work more as a bonus than an incentive for fabricators who were probably going to spend that money anyway,” he said.
Nonetheless, Emmegi’s finance partners are signposting the benefit to all customers because it applies to all hire-purchase-type finance agreements, and is effectively “free money from the government”.
Ian said: “We’re already delivering machines to customers who are taking advantage of the Super Deduction Tax benefit, and they’re almost universally thanking Rishi for his continuing support.”
One example is trade, retail and commercial fabricator PRG based in Romford, which purchased an Emmegi Phantomatic M4 CNC machining centre and Classic Magic twin head saw.
Operations director Dawud Sandhu and sales director Asaad Hussain said: “The Super Deduction Tax was definitely a factor in our decision to order the machines when we did and to choose new rather than second-hand or refurbished models. Alongside the deferred VAT, which is helpful for our cashflow, it’s a really useful bonus.”
PRG is the first of the new generation of Decalu fabricators which are choosing Emmegi machines.
Emmegi’s sales manager Andrew Jones said: “As more fabricators take on Deceuninck’s Decalu system, we’re seeing a rise in enquiries for new machines which will help them to optimise efficiency.
“Given that one of the USPs of the system is the speed of fabrication, it obviously makes sense to choose from our range of high-speed machining centres and saws which will help them increase throughput and maximise the output per operator.”
