As the country continues its cautious bounce back after a crippling year for many businesses in 2020, we are seeing even more supporting initiatives from Government forming part of their stimulus package. This is one we’re particularly excited about as this really helps business to Build Back Better. This super deduction tax break is designed as a kick-start to the economy, supporting businesses to invest in much needed equipment at this crucial time. So, let’s take a look at what businesses can claim for.
What are the criteria for claiming the super deduction tax break?
The opportunity to claim for this tax break has been in place from 1 April this year and will run until 31 March 2023. This directly places support with companies investing in new plant machinery. This will enable businesses who buy these assets to claim:
- a 130% super-deduction capital allowance on qualifying plant and machinery investments
- a 50% first-year allowance for qualifying special rate assets
Any purchase arrangements already in progress before the 1st April will not be eligible.
What does this tax break mean in real terms for you?
This super-deduction means that for every pound spent on investing in new machinery, you will be able to cut your tax bill by 25p. So this really does represent an incredible saving for individual businesses as well as stimulating growth for the UK as a whole.
What equipment qualifies for the tax break?
The equipment will need to be unused – so not second hand. The list of machinery can be anything from working vehicles to office furniture. This list below shows the kind of equipment that can be claimed for, and is not exhaustive. Click here to see more about eligible equipment for the super deduction tax break fact sheet.
- Solar panels
- Computer equipment and servers
- Tractors, lorries, vans
- Ladders, drills, cranes
- Office chairs and desks
- Electric vehicle charge points
- Refrigeration units
- Foundry equipment
What could these savings look like in practice?
This is an example of a super-deduction saving after spending £1 million on qualifying machinery:
• Spending £1m in this way means the company can deduct £1.3m
(130% of the initial investment) in computing its taxable profits
• Deducting £1.3m from taxable profits will save the company up to 19% of that – or
£247,000 – on its corporation tax bill.
Can I use the super deduction tax break for new packaging machines and equipment?
The answer is YES!
There has never been a better time to think about investing in packaging machinery with this opportunity. If you have been thinking of upgrading to a more automated approach or integrating packaging machinery where you can – now is definitely the time to do it. And now you will be able to afford to do more and make a real impact in your operation’s productivity.
Packaging machinery can bring real benefits to your operation by speeding up processes, making your business more efficient and competitive. So your shopping list could include equipment that also allows you to consider eco-friendly options with paper tape machines, sustainable cardboard shredders like the Ecopax machines to create your own void fill as well as the range of Papertech machines that supports on demand paper void fill.
But where you’re really going to see increased benefits is with larger investments that can create a step-change in your operation with equipment such as pallet wrap machines. If you’ve been thinking ahead to April next year and the start of the new Plastic Packaging Tax, wondering how you were going to adapt your operation – then this is your big opportunity to meet this head on, still save money and reduce plastic consumption.
Buying a new pallet wrap machine with the super deduction tax break
Buying a new pallet wrap machine can be quite daunting. If you’ve been working with an older model for a while, you will be amazed at the advancements that have been made. So we’ve put together a guide to the latest and some of the best pallet wrap machines you can find on the market today from entry level options all the way up to portable intelligent ‘robot’ style models!
Team up your new machine with a high performance film and you’re all set to:
> speed up your despatch operation
> reduce the amount of plastic you use and the amount of film you need to buy
> reduce your liability for the Plastic Tax due to 40% reduced plastic consumption
> build in safety with high performance film combined with latest machine advancements
> reduce your film costs by 25% on your cost per wrapped pallet
Unlocking future savings with the super tax deduction tax break
We think this really is too good to miss! Not only are you benefitting hugely from your initial investment, it will continue to pay dividends down the line as you start to reap the on-going accumulated savings.
There is a lot to consider and a good place to start is by asking your packaging supplier to come in, provide you with a complete overview of your operation, working with you to understand what type of machinery will serve you best. Performing a complete plastic audit will help you can see in real terms the plastic and financial savings you can make, on top of the tax break.
If you would like further information on how to get started, please drop us a message using the form below.