Can full expensing unlock more catering
A government initiative that provides added incentive for businesses who may otherwise be reluctant to invest when it’s most necessary could benefit the catering equipment industry, writes Rebecca Vincent, UK commercial director at Foster and Gamko.
Chancellor Jeremy Hunt’s announcement of new measures to make the UK’s tax system more competitive and supportive of enterprise during the 2023 Spring Budget, was, by and large, met with a degree of hope within the catering equipment industry.
Hunt’s introduction of two major new capital allowances – Full Expensing (FE) for certain plant and machinery costs, and 50% First-Year Allowance (FYA) for longer term investments such as solar panels – is certainly a positive measure to hold on to, a step in the right direction despite the need for additional support too.
Capital allowances – a type of tax relief for businesses that allow them to deduct some or all of the cost of an item from their profits before paying tax – are not new. Put simply, they’re measures introduced with the aim of promoting conditions for enterprise to succeed and to encourage economic growth.
At face value, they’re also an important vote of confidence from the government in a world where cost of living and subsequently, running a business, is more challenging than ever.
The popular Super Deduction scheme, which was introduced in April 2021 was the single biggest tax incentive any UK government had ever offered businesses looking to invest in equipment.
Allowing companies to cut their tax bill by up to 25p for every £1 spent on new plant and machinery, its termination in March this year had loomed.
Full Expensing, announced in the Spring Budget just before the super deduction expired, provides a similar saving to the Super Deduction in that, depending on net profit, it offers a tax saving of between 19p and 25p for every £1 invested on new plant and machinery.
It’s an allowance which we’re welcoming at Foster and Gamko. Investing in the best quality, cutting-edge refrigeration equipment can make a huge difference to the overall performance of a hospitality business, driving down costs in other areas such as energy and labour, and eliminating risk to food safety.
If businesses are considering an upgrade to their refrigeration equipment or their kitchen needs a bit of an overhaul, the introduction of FE makes it a great opportunity to take action now.
That said, with many businesses struggling for cash flow, when they most need to invest in reliable, sustainable equipment, the initial capital outlay of state-of-the-art machinery can be a stumbling block.
Full Expensing offers a fantastic extra incentive for businesses who may otherwise be reluctant to invest when it’s most necessary.
What’s more, when combined with Foster’s interest-free credit scheme – which allows for equipment to be paid over 12, 18 or 24 months – it makes now a great time to invest in quality, reliable refrigeration.
For smaller catering businesses looking to grow, the government’s support doesn’t stop at Full Expensing. A new simplified tax system that’s being introduced can also help free up the valuable time and money that’s absolutely essential when running a small business.
Look out for changes that have recently been made to the Enterprise Management Incentives (EMI) scheme.
This will simplify the process to grant options and reduce the administrative burden on participating companies – it will become easier to apply for grants to invest in the best equipment for your business – allowing businesses to upgrade their refrigeration capabilities even more easily.
Originally written for Catering Insight.