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