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Changes to Capital Allowances in the Budget

By Jaime Lumsden

There has been some positive news for claimants of Capital Allowances for Property Embedded Fixtures and Fittings in the Budget

As expected with the increase in corporation tax taking effect from 1/4/23 the Super Deduction will end  – this was designed to give you accelerated 25% relief on capital expenditure prior to the corporation tax change.

However, the Super Deduction has been replaced with Full Expensing (FE), this comes into effect from 1/4/23 initially for 3 years, but the intention is to make it permanent. This gives you 100% relief against profits of any main/general pool capital items with no upper limit on expenditure.

It only applies to companies and only for new items not second-hand.

Companies will save at their highest marginal rate of tax 19% – 25%.

Expenditure on capital items that fall into the special pool will qualify for the 50% First Year Allowance. The rules are as above but with only 50% claimable in the year of expenditure with the balance falling into the special rate pool (claimed thereafter at 6% per year)

This also is for 3 years but intended to make permanent.

Annual Investment Allowance (AIA)

This was planned to fall to £200,000 of qualifying expenditure but has temporarily been kept at £1mil

Whilst this seems irrelevant when considering the FE introduction, AIA applies to unincorporated businesses as well as companies.

For an assessment of whether you can claim any of these Tax reducing opportunities, please contact us at UKBA.

Jaime Lumsden | UK Business Advisors (

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