UK Capital Allowance Regime - Consultation
A publication aiming to begin a conversation with businesses about how to reform the UK’s capital allowances regime has been published today, by the UK Government.
The Chancellor Rishi Sunak has called on businesses of all sizes to have their say, after his Spring Statement pledged to look at how to sustainably cut and reform business taxes ahead of the Autumn Budget.
Options discussed in the paper include:
- increasing the permanent level of the Annual Investment Allowance
- increasing the rates of Writing Down Allowances
- introducing general First-Year Allowances (FYAs) for qualifying expenditure on plant and machinery
- introducing an additional FYA
- introducing permanent full expensing
In addition to the Spring Statement options, the guidance published today has three further areas of interest:
i) Investment decisions – The UK government would welcome evidence from stakeholders on how firms make investment decisions, the relative importance of capital allowances in those decisions, and how they are taken into account.
ii) The super-deduction – The UK government wants to incorporate the latest evidence on the impact of the super-deduction into its decision-making. As part of this, they are interested in views on how the super-deduction has affected the investment decisions of businesses, ahead of it ending in 2023.
iii) The current system of capital allowances – As set out at Spring Statement, the UK government acknowledges that the generosity of the permanent system of capital allowances compares unfavourably to international peers and wants to know what more the capital allowances regime can do to support business investment.
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