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
-
Capital gains tax break for job-related accommodation
You’re in the process of selling a property that you bought as your home but because of your job have never lived in. You’ve been told that you’ll have to pay tax on any gain you make, but might a special relief get you off the hook?
-
Should you revoke your 20-year-old option?
Your business has let out a building to a tenant and it is now just over 20 years since you opted to tax the property with HMRC. Should you revoke it so that your tenant no longer needs to pay VAT?
-
Chip shop owner fined £40k for hiring illegal worker
A Surrey fish and chip shop owner has been left in shock after being fined £40,000 for allegedly employing someone who didn’t have the right to work in the UK, even though he conducted a right to work check. Where did this employer go wrong and what can you learn from it?