In addition to the previous announcement that the Annual Investment Allowance was being permanently increased to £1 million for companies and unincorporated businesses, the Chancellor has announced further changes in respect of capital allowances from 1 April 2023.

Temporary first year allowances or ‘full expensing' for companies only

As a way of compensating for the end of the super-deduction after 31 March 2023, companies incurring expenditure on new plant and machinery1  between 1 April 2023 and 31 March 2026 can now claim:

  • a 100% first year allowance for main rate expenditure, effectively full expensing, or
  • a 50% first year allowance for special rate expenditure (e.g., integral features of buildings).

Where such assets are disposed of, there will be an immediate balancing charge. This will be at 100% of the disposal value for full expensing and 50% otherwise.

First year allowances for electric vehicle charge points

The ability to claim 100% first year allowances for qualifying expenditure on charge points for electric vehicles has been extended to 31 March 2025 and 5 April 2025 for corporate and income tax purposes, respectively.

Footnote

1.The general exclusions in s46 CA2001 do not qualify for the relief which includes cars and assets acquired for leasing.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.