The chancellor’s much heralded Super Deduction Tax gives businesses a capital allowance of 130% in the first year on any investments they make in qualifying plant and machinery.
Ian Latimer, Emmegi (UK)’s Managing Director, evaluates its value: “Effectively, it means that for every £10,000 spent on machinery, there’s a saving of £2500 on the corporation tax bill – compared with £1800 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 1 April 2021 and 31 March 2023 but can’t be used retrospectively or for second-hand purchases.
“In normal circumstances, as a machinery supplier, I think we’d be shouting from the rooftops about the value of the new Tax to this industry. But, in reality, we didn’t see any meaningful fall in investment last year apart from at the very start of the first lockdown, and 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.
“However, our finance partners are nonetheless signposting the benefit to all customers from now on because it applies to all hire-purchase type finance agreements, and we’re making sure that no one misses out on what is, for the next two years at least, essentially free money from the government.
“There are a couple of caveats obviously – if you dispose of the machine before 31 March 2023, it could end up costing you more in tax than you got a deduction for, but that’s unlikely given the forecasts being made about the ongoing demand right across the construction sector.
“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, who have purchased an Emmegi Phantomatic M4 CNC machining centre and Classic Magic twin head saw.”
Operations Director Dawud Sandhu and Sales Director Asaad Hussain agreed that it was a benefit to their business: “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 who are choosing Emmegi machines. Emmegi’s Sales Manager Andrew Jones added: “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.”
Dawud Sandhu and Asaad Hussain agreed: “We chose Emmegi because we wanted a machinery supplier which could match the quality and performance of the Decalu product, and which had an established partnership with the Decalu team so that they could coordinate on installation and training. We also liked the fact that Emmegi (UK) has sales, servicing and customer service teams here in the UK who we know we can rely on.”
The new machines were delivered to PRG in June and the company is manufacturing windows, doors and bi-folds in the Decalu system for trade and residential customers throughout the London and South East region.