Autumn Budget 2024: Capital Allowances update

The Savills Blog

Autumn Budget 2024: Capital Allowances update

The Autumn Budget 2024 set out various tax measures designed to enhance economic stability, and fund sustained economic growth with a view toward creating a stable and predictable environment for businesses to make long-term decisions with confidence.

In the Budget, the Government published its Corporate Tax Roadmap, outlining its plans for the duration of this Parliament, which were aimed at three key objectives: predictability, stability and certainty. Consequently there were no major changes to the current regime.

The Government also highlighted the importance of capital allowances in supporting cross-economy business investment and assisting growth, with upcoming consultations and measures directed toward this aim. 

Here are the key take-aways - 

NO CHANGES
  • Corporation Tax: main rate capped at 25% for the duration of this Parliament; small profits rate and marginal relief remaining at their current rates and thresholds.

  • Income Tax: rates and thresholds to be maintained until 2028 under commitments inherited from the prior government.

  • Capital Allowances:
  • Permanent Full Expensing: Unchanged for the duration of this Parliament, providing companies with:
  • 100% first-year allowance for main rate expenditure. 
  • 50% first-year allowance for special rate expenditure. 
  • Annual Investment Allowance (AIA): unchanged for the duration of this Parliament, AIA provides 100% first year tax relief for expenditure on eligible expenditure up to  £1,000,000 per annum, and is available for both companies and unincorporated businesses (including most partnerships). 
  • Writing down allowances for plant and machinery and integral features remain unchanged.
  • Structures and Buildings Allowance for certain residual building costs remain unchanged.
  • Continued flexibility: Business choice over the timing, types and amounts of capital allowances claims.
  • Temporary 100% first-year allowances for zero-emission cars and electric vehicle charge-points now extended to April 2026.
  • Research and Development: Merged R&D Expenditure Credit scheme and Enhanced Support for R&D intensive SMEs remain unchanged; ongoing guidance on R&D reliefs.
UPCOMING CHANGES AND CONSULTATIONS
  • Research and Development:
    • Establishing the R&D expert advisory panel. 
    • Launching an R&D disclosure facility by the end of 2024.
    • Consultation on widening the use of advance clearances in the R&D reliefs.

  • Tax Administration: A raft of measures were announced, aimed at closing the “tax gap” between tax owed and paid, modernisation and reform of HMRC systems, and improving HMRC customer service.

  • Land Remediation Relief: Upcoming consultation in Spring 2025 will review its effectiveness.

  • Capital Allowances:
  • Upcoming consultation in late 2024 on capital allowances for pre-development expenditure, in response to widespread concern in light of the decision in Gunfleet Sands Ltd and others vs. HMRC (2023). 
  • Clarification for businesses on what qualifies for capital allowances.
  • Simplification of the Capital Allowances Act 2001, making the existing capital allowances system more straightforward for businesses.
  • Investigation into measures to encourage investment in renewable energy and major infrastructure projects.
  • Extension of full expensing to assets bought for leasing – when fiscal conditions allow.

These developments, together with other current issues relating to Capital Allowances and related investment tax reliefs will be covered in our upcoming annual webinar in Spring 2025.

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