Reinvesting in your palletising operation: 2016 AIA tax relief

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Since 2008, the HMRC annual investment allowance (AIA) has been revised four times and from 1st January 2016 will drop from an interim allowance of £500k to the highest permanent AIA ever of £200k. Managing Director of Pacepacker Services, Dennis Allison, shows how much £200,000 could buy you in automated palletising equipment, illustrates the ROI and explains why it is better to invest in new business assets than simply give the tax authority your hard earned profits.

Reinvesting in your palletising operation: 2016 AIA tax reliefDennis comments: “When the Chancellor announced that he was capping the AIA at £200,000 in his 2015 autumn statement, medium-sized companies operating in manufacturing and agriculture, two sectors that Pacepacker specialises in, breathed a sigh of relief. There had been speculation that it would revert to £25,000, so settling on a year-on-year tax relief allowance of £200,000 is a considerable boost to long term investment.”

The big question is, if you decide to reduce your taxable profits by using this generous capital expenditure allowance to purchase palletising equipment, how do the figures stack up and what will your money buy you?

Dennis emphasises: “The answer to this will always be application and customer driven, and in palletising operations there are so many options and routes you might go down. The price of a new robotic palletiser system from Pacepacker can start at around £30,000, and due to new technology and more widespread adoption of robots, the costs across the range continue to fall. With that it mind, you could fully automate your facility with a complete packing and palletising line using your 2016 allowance.”

Compared with the more traditional layer palletisers, robotic palletising systems are far outstripping demand. There are many explanations for this observes Dennis, notably the footprint, speed, flexibility and cost of ownership. Cartesian robot palletisers are equally popular among customers, and typically come in at half the cost of a layer palletiser. Pacepacker also offers a wide choice in pre-owned robots, which contrary to popular belief can also be offset against the tax allowance, providing the used machinery is new to your business.

More importantly, any asset you buy will always add value to your business, notes Dennis: “As well as having a saleable value, the speed and multi-functional nature of automated palletising solutions, combined with lower housekeeping costs increases your profits even more. What’s more, robotic palletisers can be reprogrammed to perform different tasks, so they will never sit idle. By using the AIA, it is tax deductible so won’t cost you anything upfront. Instead of paying £200k direct to the tax coffers, you will be using legitimate tax breaks to reinvest in your business’s long-term future.”

Regional grants and incentives

Knowing that there’s greater stability going forward with this tax break provides British manufacturers with the green light to continue investing. Dennis emphasises: “For any customer considering purchasing new palletising equipment, we always suggest speaking first to their accountant or financial adviser so that they can make an informed investment decision. It’s also advisable when holding these conversations to look into regional grants and incentives.”

To help customers build up an accurate picture of equipment payback, Pacepacker has also developed a nifty new calculator tool that it is starting to introduce to customers. Inputting a range of data from the previous financial year, factoring in the number of shifts a facility runs, the number of operatives and agency staff employed, holidays and sick days taken by the workforce, etc., Pacepacker can accurately calculate the payback period based upon the specific project value and the types of robotic systems that could be deployed. Additional data, including the legal national minimum wages and the automatic workplace pension scheme arrangements are also being included. Dennis adds: “Having this comparative tool quickly measures the real value that a business can realise when automating different aspects of a palletising operation.”

Go to for more information about palletising equipment.

06 January 2016

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