Measure
The government has announced permanent 100% first year allowances (“Full Expensing”) for companies investing in plant and machinery and 50% first-year allowances for special rate assets. These measures were originally introduced as part of Spring Budget 2023 but were due to expire on 31 March 2026.
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 have effect from Royal Assent to Autumn Finance Bill 2023, for qualifying expenditure incurred on or after 1 April 2023.
We expect this measure to be welcomed by companies as it provides much needed certainty to encourage greater long-term investment, albeit Full Expensing is only a timing difference. Similar tracking requirements to the super-deduction will be required to comply with balancing adjustments rules on disposal. The move to permanent Full Expensing potentially opens the door to simplification of the capital allowances regime, with the government also having announced a consultation to help shape policy in this area.