UK Government – Spring Budget 2023 – Two major capital allowances
Post Author:
Rona Burns
Date Posted:
March 16, 2023
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Two major capital allowances
As the super-deduction for companies comes to an end on 31 March 2023, two new major capital allowances were announced in the UK Government’s Spring Budget 2023:-
- Full Expensing (FE)
FE will allow companies to deduct 100% of the cost of certain plant and machinery from their profits before tax. It will be effective from 1 April 2023 to 31 March 2026.
It will apply to spending on main rate equipment, which includes but is not limited to, warehousing equipment such as forklift trucks, tools such as ladders and drills, construction equipment such as bulldozers and excavators, machines such as computers and printers, vehicles such as tractors, lorries and vans, office equipment such as chairs and desks, and some fixtures such as kitchen and bathroom fittings and fire alarm systems.
As part of his commitment to maintain a stable economy, the UK Chancellor’s long-term ambition is to make full expensing permanent.
- The 50% first-year allowance (FYA)
This will enable companies to continue to deduct 50% of the cost of other plant and machinery, known as special rate assets, from their profits during the year of purchase. This includes long life assets such as solar panels and thermal insulation on buildings.
The 50% FYA was introduced alongside the super-deduction and was also due to end on 31 March 2023. It is now being extended by three years to 31 March 2026.
Again, as part of his commitment to maintain a stable economy, the UK Chancellor’s long-term ambition is to make 50% FYA permanent.
The information in this blog provides only an overview of HMRC guidance and legislation in force at the date of publication and no action should be taken without consulting the detailed HMRC guidance and legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this blog can be accepted by the firm.
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