Measure
The government has announced a 100% first-year capital allowance for qualifying plant and machinery expenditure, known as full expensing, and a temporary 50% first-year allowance for qualifying special rate assets. The amount of expenditure that can qualify for this allowance is uncapped.
Companies within the charge to corporation tax which incur capital expenditure on the provision of plant and machinery assets, subject to certain exclusions which apply to first year allowances.
The measure will come into effect on 1 April 2023, and will apply to qualifying expenditure incurred on or after 1 April 2023 but before 1 April 2026.
We expect this measure to be welcomed by companies otherwise facing the prospect of returning to a much less generous UK regime around UK capital allowances. Similar tracking requirements to the super-deduction will be required to comply with balancing adjustments rules on disposal. In the context of the increase in the main rate of corporation tax to 25%, capital allowances have become an increasingly valuable tool for offsetting against taxable profits.