The Spring Statement highlighted that the government is looking to cut and reform taxes on capital investment to help business drive and maintain economic growth.
In the March 2021 statement, the 130% super deduction was announced, which offers a temporary enhanced first year allowance on all qualifying capital expenditure. This is though due to end in April 2023. Whilst this change is still more than twelve months away, the government is keen to ensure it continues to target support for future business investment and as part of this is looking at how future reforms could best support economic growth.
At present, tax relief on capital spend in the form of capital allowances is available in numerous ways. This can be through the current £1m annual investment allowance, or the two rates of writing down allowances for plant and machinery additions, or the special rate of annual allowance for expenditure on structures and building, or the 100% first year allowances for selected items including zero emissions cars and qualifying capital spend to support research and development activity.
Over the summer the government will consider all of these and go further in reviewing latest evidence between how tax incentives encourage business investment as well as the impact of the super deduction and make firmer proposals ahead of the budget in the autumn ready for changes to take effect from April 2023.