In the March Budget, The Chancellor announced a new incentive for UK businesses. With the aim of driving investment, the new scheme provides a unique opportunity for food and drink manufacturers planning capex projects for new factories or upgrades to existing sites. Here Paul Vandrill, associate CFO at Integrated Food Projects explains how the scheme works, and why food and drink manufacturers need to be quick off the mark to take full advantage.
The new ‘super deduction’ is a welcome incentive for UK businesses, and will allow food and drink manufacturing companies to claim 130% of any qualifying plant and machinery investment as a capital allowance.
To put it simply, it will allow companies to cut their tax bill by up to 25p in every £1 invested.
Since the COVID-19 pandemic started, investment into many businesses have fallen, this scheme aims to kick-start productivity and help to drive business growth post-COVID-19.
Food and drink manufacturers who were considering or planning investment into their plants and machinery are well placed to take advantage of this scheme, as long as the investment is made within a two-year period starting 1 April 2021.
There is of course qualifying criteria for what money can be spent on, with exceptions for items such as cars, but we believe that the vast majority of purchases required in the food and drink manufacturing sector will be covered. There is a fixed end date for the scheme, so businesses will need to move quickly if they are planning on taking advantage of the savings.
At IFP we are committed to working with the very best and forward-thinking food and drink manufacturers. We have a proven track record of helping businesses deliver their vision of what a factory of the future looks like and can achieve.
Investment into purpose-led projects, with a focus on sustainability and reducing the environmental impact of the food and drink manufacturing process has been central to most of the projects the IFP team has worked on in recent years. This, alongside an increase in the use of automation and AI in factories will be key investment opportunities for food and drink manufacturers looking to take advantage of the Super Deduction over the next 24 months.
The team at IFP is always to hand to speak to you and share our expert advice and experience of capital investment projects in the food and drink manufacturing sector.
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