INVESTMENT | Engineering Capacity
Supercharged investment opportunity
Tim Paddison, managing director of Hoffmann Group UK, asks what the Government’s ‘Super Deduction’ incentive means for manufacturing businesses. After a turbulent year for the manufacturing sector, the government’s 2021 Budget contained several positive developments and promises to businesses. In addition to the announced extension of the furlough scheme until September, and the bonus for hiring apprentices that is now doubled to £3,000, the centrepiece of the Chancellor’s speech is the “Super Deduction” a move that will significantly benefit the sector. Under the super deduction arrangement, for every pound that a company invests, their taxes will be cut by up to 25p. From the start of April this year, until the end of March 2023, companies can claim 130% capital allowances on qualifying plant and machinery investments. Such investments include assets used in the course of a business and, for manufacturing businesses, this could include anything from drills, cranes and machinery to new computer equipment or a 32
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company van for delivering tools to customers. So, with the growing opportunity and incentive for manufacturing businesses to spend and invest, what benefits could this bring to the sector? An opportunity to prioritise business growth After a year of disrupted service caused by the complications of the pandemic and the ongoing issues posed by Brexit, the super deduction announcement is a real opportunity for manufacturers to look ahead and prioritise their business growth. Encouragingly, along with the promise of this announcement, the sector is already starting to
witness growth with the IHS Markit Manufacturing PMI reading for April 2021 reporting that in March of this year, the sector has seen the fastest output growth since late 2020. This reading attributes this growth to recent inflows of new business from both domestic and overseas markets across the sector as developments such as the vaccine rollout, ease buyers’ concern. To further boost this upward trajectory of the sector, the super deduction also offers manufacturers the much-needed wriggle room to invest in areas they wanted to grow, prior to the pandemic. For example, if the business had wanted to invest in automation to expand its service MAY 2021
