Chancellor Rishi Sunak said he was looking new options to maximise the benefits offered by Capital Allowances in his Spring Statement on 23 March 2022.
The reforms aim at building on the momentum created by the Super Deduction by:
- Extending the £1 million Annual Investment Allowance (AIA) to 31 March 2023.
- Reiterating that the 'Help to Grow: Digital' discount for approved software is still available.
The Government is considering further options ahead of the Budget. The Government has illustrated the following changes that it could consider making to improve the generosity of the reliefs available for capital expenditure:
- Permanently increasing the AIA to £500,000.
- Increasing Writing Down Allowances.
- Introducing First Year Allowances for main and special rate assets, then writing down the balance at lower WDA rates.
- Introducing an Additional First Year Allowance to bring overall amounts claimable above 100% of the initial cost.
- Introduce full expensing allowing businesses to write off the costs of qualifying investments in one go.
- Changing the generosity of Structures and Buildings Allowances or introducing new targeted reliefs such as those attached to Freeports.
The Spring Statement pledges to engage with stakeholders and confirm plans in the Budget in advance of introducing new measures from April 2023.
Useful guides on this topic
Super-deduction & First Year Allowances
What is the new Super-deduction allowance? When does it apply and what is the rate of allowance? What other First Year Allowances (FYAs) are available? What is the SR Allowance? What if I dispose of an asset on which the Super-deduction or SR allowance has been claimed?
Annual Investment Allowance (AIA)
What is the Annual Investment Allowance? What are the limits? What expenditure qualifies?
Budget 2021: Help to Grow
Applications for the government's 'Help to Grow' scheme announced in Budget 2021 have opened. The programme will help small and medium-sized businesses with digital and management training.