The Chancellor’s Capital Allowance Super Deduction could spark a much-needed plant and machinery equipment upgrade, according to one of the UK’s most innovative companies.
The prediction, from Vert Technologies, manufacturers of air compressor equipment, comes in the wake of the announcement that tangible assets, such as plant and machinery used in the course of business, are to be eligible for a ‘Super Deduction’ to a company’s Corporation Tax bills.
Under the Super Deduction, for every pound a company invests, Corporation Taxes are cut by up to 25p for every pound spent. In practise, this means that companies can benefit from 130% first-year relief on qualifying plant and machinery investments until 31 March 2023.
Phil Harris, Chief Executive of Vert Technologies, manufacturers of the Conical Rotary Compressor (CRC), says the Super Deduction could spark a wholesale machinery upgrade. “There is a lot of old plant and machinery still in use across industry that is having a detrimental effect on operators, doing nothing to help companies achieve their sustainability targets, impacting productivity and competitiveness.
He continues: “A classic example is old air compressor equipment used to provide air for hand tools, such as impact wrenches and nail guns or used to install fibre optic cables. Often this old equipment is very noisy, has low duty cycles and is not as energy efficient as new technologies. Modern air compressor equipment, such as the Vert compressor, is much quieter and has a 100% duty cycle, which will improve productivity, installation times and protect operators.”
The Chancellor’s announcement covers most tangible capital assets used by industry, including everything from lorries and vans, through to solar panels, computer equipment, refrigeration units, foundry equipment and air compressors. Announcing the change, the Chancellor said that the Super Deduction will lift the UK’s capital allowance regime, in terms of net value, from 30th in the OECD to 1st.
Mr Harris believes that the Capital Allowance is a very welcome intervention by the government. “For too long UK industry has been in the slow lane when it comes to capital investment which has held back its productivity and competitiveness on the world stage.
“It is great to see the Treasury supporting industry in encouraging it to invest in the future of the excellent and highly innovative manufacturing sector in the UK.”
