How can we use the temporary tax relief on capital expenditure on a JETRIX?
With everything going on, the government’s temporary tax relief on capital expenditure was a welcome relief when it was announced on the 1st April. Simply put they are offering a temporary increased tax relief for expenditure on plant and machinery. The term ‘temporary’ may well feature, however this is in fact anything but as the programme is planned to run right the way up to the 31st March 2023.
In practical terms, we thought it was worth explaining how this kick start for the economy can help businesses looking to expand their large format printing operation or replace machines that are becoming obsolete. It signals a significant support opportunity for any company seeking finance and looking to invest in new kit such as a JETRIX LED UV Printer. While there is an emphasis on ‘qualifying expenditures’ the government website is clear which in summary means there is:
- A super-deduction providing allowances of 130% on most new machinery investments that ordinarily qualify for 18% main rate writing down allowances
- A first year allowance of 50% (FYA) is available on most new machinery investments that ordinarily qualify for 6% special rate writing down allowances and is available for expenditure incurred on special rate (including long life) assets
What are the conditions?
Well obviously any scheme like this is not going to be without its own specific restrictions. However, we feel they are realistic, relatively easy to understand and practical:
- The expenditure is incurred by a company within the charge to corporation tax
- The machinery must be new and unused
- The expenditure must be incurred on or after 01 April 2021 and before 01 April 2023
- Expenditure incurred as a result of a contract entered into before 03 March 2021 is not qualifying expenditure for these new reliefs
- The asset is not used for leasing
You also need to be mindful that any assets that have been claimed under the super-deduction, will have their disposal value for capital allowance purposes affected. If you want to know more then check out the government’s website for more details.
What is eligible?
From a large format printer perspective, we can only assume that these terms cover most capital equipment/apparatus kept for use in the business. But more information on the specifics may become available as time passes. Apparently the usual situation is that machinery is generally split between ‘main rate’, ‘special rate’ and ‘non-qualifying’ assets. Again, there is some high-level guidance on what counts as plant and machinery on the government’s website. To help the HM Treasury have also published a factsheet on the super-deduction outlining more specific details which may be helpful.
How is the temporary tax relief on capital expenditure worked out?
The equation is: unit price x 130% x 19% less this figure = discounted price. However, probably the easiest way to look at this is to take a real example from our JETRIX printer range. So if you take a JETRIX LXi8 LED UV Flatbed Printer this starts with prices from about £182,200. Less £45,003 which means the actual cost when taking advantage of the scheme is £137,197!
So this saving is great news if your business is considering investing in a large format LED UV printer in the next couple of years. If you are, then reach out as we would happily discuss what your options are and how we could help you make this happen.