Spring Budget March 2023 – introducing “Full Expensing”
The lobbying for an extension to the 130% Super Deduction Allowances after 31st March 2023 didn’t prove successful in the recent Budget.
However, the Chancellor did introduce a new measure called “Full expensing” which allows companies to claim 100% first year capital allowances on qualifying plant & machinery from April 2023 until 31st March 2026. With the rate of Corporation Tax set to go up to 25% next month this will mean that companies will be able to reduce their Corporation Tax by up to 25p in the pound dependent on how much profit they have generated. Please note that this relief is only available to limited companies but one good feature is that it doesn’t have an expenditure cap. There is a different type of relief for unincorporated businesses called Annual Investment Allowances which also provides for 100% first year allowance but this is limited to £1m of expenditure in any one given year.
If you go to the government website hyperlink https://www.gov.uk/government/publications/full-expensing/spring-budget-2023-full-expensing this will take you to the HM Treasury page which provides a very helpful explanation of all of this. As part of your reading we would recommend that you take in Section 4 which explains in detail the differences between the new Capital Allowances now on offer.