What are the implications of the announcement?
The Autumn Budget 2023 is set to influence investment decisions, financial strategies, and the overall economic landscape. Our team has been busy directing the budget announcements to understand the implications, specifically how capital allowances are affected.
What we have identified so far...
Little to no change
The subject of Capital Allowance once again proved to be a headline feature of Jeremy Hunt’s Autumn Budget.
There appears to be little or no change, but rather a continuation of what was originally a temporary measure to help incentivise and fuel business investment.
Previous changes
Let’s look back to 2021
In 2021, a new first-year allowance was introduced called Super-deduction. In short, this provided an enhanced 130% tax deduction against qualifying spend. Super-deduction proved to be highly successful in stimulating investment, however, it also proved to be incredibly expensive for the government as it had a dramatic impact on tax revenues.
Earlier this year, it was announced that Super-deduction was to be no longer available. Replacing this was a new tax incentive called Full Expensing, providing a similar benefit to Super-deduction without the enhanced 30%. This was seen as more of a compromised alternative to Super-deduction.
Are there any changes?
Full Expensing is to be made permanent
Full Expensing was uncapped, as it was a temporary measure similar to Super-deduction. After listening to the 2023 Autumn Budget, the headline news when focusing solely on Capital Allowances was the announcement that Full Expensing will be made permanent.
Discover more about Full Expensing, how it works, and whether this could apply to your business
Other changes
Investment Zones
An additional section of the Autumn Budget touched upon and provided insight into Investment Zones. At CARS, we feel this section and its implications could affect or be useful for our network.
We’re currently in the process of reviewing this part of the budget in more detail and will share our findings and thoughts in due course.
What do we think of the Autumn Budget changes?
“Any positive changes to Capital Allowances are always welcomed. It was good to see Capital Allowances playing a key part in the Autumn Budget. We find Full Expensing is a benefit for those businesses spending in excess of £1m a year on qualifying costs. Where qualifying spend exceeds £1m, Full Expensing is incredibly useful as it significantly accelerates tax relief available from Capital Allowances. Those spending less than £1m would still benefit from the Annual Investment Allowance meaning these businesses wouldn’t necessarily gain any additional tax relief through Full Expensing.”
~ Chris Roberts, Managing Director
Lean on our expertise to ensure you have secured all available tax relief...
Latest News
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5 December 2024What Are Qualifying Activities for Capital Allowances?
Capital allowances are a key tax relief available to businesses for qualifying activities. They allow businesses to deduct the cost of certain capital expenditures related to these activities from their taxable profits, reducing their overall tax burden. However, not all purchases or investments qualify.... -
3 December 2024How Do CARS Assess Capital Allowances?
At CARS, we assess capital allowances and offer businesses and property owners a significant opportunity to reduce their tax liabilities by deducting qualifying capital expenditures. Here at Capital Allowance Review Service (CARS), we provide a thorough process to optimise these claims. Our goal is to...
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