Companies to enjoy full expensing for capital items
The Budget included welcome news for companies facing the end of the super-deduction later this month, with a period of full capital expensing announced. What are the details?
The super-deduction is ending on 31 March 2023. This temporary measure gives companies an enhanced deduction for capital expenditure on “main rate” capital equipment, e.g. plant and machinery. A key feature of the super-deduction is that it is not subject to an upper limit. Unincorporated businesses are restricted in what capital expenditure they can write off in year one by the annual investment allowance (AIA). In order to avoid a cliff edge, the government has announced that from 1 April 2023 to 31 March 2026, companies will be able to claim a 100% first-year allowance for main rate items, with no upper limit. As the main rate of corporation tax is increasing to 25% from 1 April, this three-year period will be a good time to incur any significant expenditure that might otherwise be restricted, e.g. if companies are subject to the AIA after 31 March 2026.
As an additional measure, the 50% first-year allowance for “special rate” items will continue for the same three-year period.
More information can be found in the policy paper.
Related Topics
-
Beating the landlord tax hikes
Once again, landlords will be hit by tax increases announced in the Budget, even if they are operating through a company. What are the changes, and can anything be done to mitigate them?
-
Electronic VAT return
-
Government announces significant climbdown on IHT reforms
The introduction of a £1 million cap on 100% business and agricultural property relief from April 2026 has been criticised particularly heavily by the farming industry. The government has announced a significant watering down of the measure. What’s happening?
This website uses both its own and third-party cookies to analyze our services and navigation on our website in order to improve its contents (analytical purposes: measure visits and sources of web traffic). The legal basis is the consent of the user, except in the case of basic cookies, which are essential to navigate this website.