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
-
Timetable for agent multi-factor authentication rollout published
HMRC has published further details of its plans to introduce multi-factor authentication (MFA) for tax agents. The rollout is intended to strengthen security across HMRC's online services and will be introduced in stages over the coming months. What do you need to know?
-
Using the EIS to unwind capital gains tax
You inherited shares from your father last year and sold them several months later making a tidy capital gain. You’ve read that the enterprise investment scheme (EIS) can defer the resulting tax bill, but how might it reduce it?
-
Electronic VAT return and payment due
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.