It was that time again this week, when businesses – not to mention members of the general public – eagerly awaited the outcome of the Chancellor’s Autumn Statement. 

With a particularly challenging economic backdrop in the UK at present, there was much anticipation surrounding the Government’s announcements, with many hoping for news that would ease the financial pressures being experienced in organisations and households alike. 

As is almost always the case, there will be ‘winners and losers’ following Jeremy Hunt’s decisions, with some critics arguing that the Statement does not go far enough. But political agendas and personal opinions aside, one thing did catch our eye.

The Chancellor confirmed that the capital allowances rate of 100% first year relief on qualifying plant and machinery investments, has been made permanent.

So what does this mean? 

The one-line summary is that UK companies can expense 100% of such capital expenditure. This means they can write-off the cost of their investment in plant and machinery, in one go – in other words, deduct the full cost of the asset from their pre-tax profits. 

The result, is the equivalent of them reducing their tax by 25p for every £1 spent.

The rationale behind the 100% capital allowances regime is to encourage businesses to keep investing in their productivity and progression – something that technological innovations in plant and machinery will support. At UNTHA, for example, our shredding advancements centre on greater throughputs, easier maintenance, machine flexibility, a quality output, and energy efficiency –engineering considerations that drive greater business productivity, not to mention profitability, by design. 

But the Government realises that confidence to invest in capital equipment can sometimes waver, when the economic climate is strained. Hence the decision to almost incentivise such investments with a tax relief benefit. 

It must be noted that this “full expensing” tax relief scheme is admittedly not new. However, while it was previously set to apply only until 31 March 2026, it now looks here to stay. 

Will this be enough for some businesses? Possibly not. Energy price hikes have placed unprecedented cashflow pressures on many firms, with some said to have seen their £4,000 monthly electricity bills rocket to £25,000, for instance. 

To combat the financial squeeze being experienced across many different industrial sectors, we’ve thought carefully about the finance options we’re offering in 2024 and beyond. 

Shredder hire packages are proving popular, for example, particularly among organisations who are new to the shredding process.  Such packages enable firms to rent a machine for a fixed weekly or monthly fee – inclusive of delivery, commissioning, training and an annual service – over a three-five year term. These contract hire arrangements are an attractive off-balance sheet option for many. 

But in truth, when it comes to making a shredder investment work for a customer, there is so much potential, including equity release and machine refinancing, options to spread repayments over a longer term, low deposits, VAT deferrals and more. 

And while many banks are still taking a long time to process finance applications, we recognise that quick credit decisions are almost as important as the mechanics of the finance package itself. There are many progressive organisations in the waste and recycling sector, and they – literally – can’t afford to stand still. 

So the capital allowances rate relief is a good thing, of course. But the key thing is to keep talking – about the cost of an investment, yes, but also the ways with which that investment could be made, not to mention how a return on investment could be generated. That’s how we’ll keep the economy moving – through continued communication, and a commitment to working together.

To discuss how to finance your next UNTHA shredder or the refinancing of your existing assets, please contact us on sales@untha.co.uk or call 0330 056 4455.