All change for capital allowances

Written by AJN Accountants
22 March 2023

The ‘super deduction’ capital allowances, which provide companies with a deduction of 130% of the cost of new plant and machinery, will end for expenditure incurred after 31 March 2023 as scheduled.

The Chancellor has proposed a new system of full expensing of the cost of all plant and machinery, including IT equipment, purchased new and unused by companies between 1 April 2023 and 31 March 2026. This is effectively a 100% first year allowance for the assets which would have qualified for the super deduction.

The Chancellor indicated that this relief may be made permanent after a review but that review is likely to happen after the next General Election, so the lifespan of this new tax relief may be in doubt.

Most businesses (not just companies) already qualify for the annual investment allowance (AIA) which provides tax relief on 100% of the cost of plant and machinery in the year of purchase for up to £1m of expenditure per year. The AIA covers a wider range of assets including items acquired second hand and plant that is leased out but not cars.

Assets qualifying for the special rate deduction of 50% will continue to benefit from that rate when the items are purchased new and unused by companies until 31 March 2026.

Back to Basics: Life Insurance Policies and Tax Treatment

Life insurance arranged by employers can provide vital financial protection for employees, their families, and the business itself, with important tax rules to consider. Employers often take out life insurance cover to protect against the financial impact of losing an...

Why Accountancy and Tax Services Should Be Seen as a Strategic Investment – Not Just a Cost

In the world of business, every line on the profit and loss statement is scrutinised. It’s natural to question whether you’re getting value from each professional service you pay for. But when it comes to accountancy and tax advisory services, seeing them purely as a...

Childcare costs – don’t miss out!

Many working families will now be arranging childcare for the school summer holidays and the start and end of the school day from September. The Government's tax-free childcare scheme could provide up to £2,000 a year per child, or £4,000 if the child is disabled,...

Related Posts

Making Tax Digital for income tax – exemptions

Making Tax Digital for income tax – exemptions

In just over six months the first group of taxpayers will be required to join HMRC's Making Tax Digital for income tax (MTD IT) programme. Some individuals may be able to avoid this by claiming an exemption. Self-employed taxpayers and landlords with qualifying income...

Winter fuel payment clawback

Winter fuel payment clawback

Thousands of eligible pensioners will receive a Winter Fuel Payment this winter. Whether or not you can keep the money will depend on your taxable income  If you were born before 22 September 1959 and you live in England, Wales or Northern Ireland you could get...

Back to Basics: Life Insurance Policies and Tax Treatment

Back to Basics: Life Insurance Policies and Tax Treatment

Life insurance arranged by employers can provide vital financial protection for employees, their families, and the business itself, with important tax rules to consider. Employers often take out life insurance cover to protect against the financial impact of losing an...

We use contact information you provide to us to contact you about our relevant content, products, and services. You may unsubscribe from these communications at any time. For information, check out our Privacy Policy.