Measure
The government confirmed a continuation of the existing full expensing measures which provide a 100% first-year allowance for expenditure on qualifying plant and machinery and a 50% allowance for qualifying special rate assets, for the duration of the current Parliament. This continuation also applies to the annual investment allowance (‘AIA’) limit which will be maintained at £1m.
The existing rates of writing-down allowances and structures and buildings allowances will continue to apply.
The government also announced the launch of consultations relating to the tax treatment of predevelopment costs and the effectiveness of the regime for land remediation relief, and continued work to explore the extension of full expensing to assets provided for leasing. More broadly, the government has stated its commitment to working with stakeholders to clarify guidance on areas of uncertainty within the capital allowances system.
UK taxpayers who incur capital expenditure.
The consultation relating to the tax treatment of predevelopment expenditure is due to launch in early 2025 and the consultation to review the effectiveness of the land remediation relief regime will commence in Spring 2025.
The government will explore extending full expensing to assets provided for leasing when fiscal conditions allow.
The government will aim to provide greater clarity on what qualifies for capital allowances over the duration of Parliament.
The continuation of the full expensing regime and the £1m limit for the AIA should be well received by businesses, on the basis that these provide much needed certainty and stability in the capital allowances regime. The continuation of these measures for the duration of the current Parliament should provide business with assurance and support in respect of incurring future capital expenditure.
The consultations announced by the government are welcome and it is hoped they will contribute to incentivising capital investment within the broader context of maintaining a stable and predictable regime.