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LEGISLATION UPDATE: Potential reforms are currently under consideration by Government for the UK Capital Allowances regime. This is ahead of the currently proposed end to the 130% Super Deduction in April 2023.

The temporary Super Deduction has been considered a success by both Government and many of our clients, as it has provided a significant boost to investment. However, with Super Deduction due to end next year, as well as the temporary increase in the Annual Investment Allowance (AIA), the Chancellor is inviting thoughts from businesses.

The Government’s Spring Statement set out high-level comments on the types of changes that could be made to the UK’s existing Capital Allowances regime.

This includes the following:

  • Increasing the permanent level of the AIA.
  • Increasing the rates of Writing Down Allowances.
  • Introducing general First-Year Allowances (FYAs) for qualifying expenditure on P&M.
  • Introducing an additional FYA.
  • Introducing permanent full expensing.

The government is seeking responses from businesses by 1st July 2022.

At HMA Tax, we are very pleased with the Government decision to look beyond the end of the Super-Deduction period, and to start considering reforms to support business investment ongoing. As the UK’s leading Capital Allowances specialist, we will always welcome additional mechanisms for our clients to claim tax relief, freeing up capital to reinvest into their commercial assets.

It’s promising to see that after the months of lockdowns, and with further economic uncertainty ahead, that businesses may have the opportunity to operate with increased means of being tax efficient.

We are proud to have helped thousands of commercial property owners in securing Embedded Capital Allowances through the Capital Allowances Act 2001, which has helped foster a culture of enterprise and growth for our clients.

We will await further announcements later in the year but look forward to Government announcing and implementing these proposed reforms.