Capital Allowances Act 2001

Product Information

Continuing costs could include maintaining additional records and calculating the balancing charge on disposal. The costs could increase each year as more assets are disposed but these costs will eventually flatten out. Companies within the charge to corporation tax investing in plant and machinery. General description of the measure There is no impact on individuals as this measure only affects companies. This measure is not expected to impact on family formation, stability or breakdown. Equalities impacts Legislation will be introduced in Autumn Finance Bill 2023 to remove the sunset date of 1 April 2026 currently contained in Section 7(3) Finance (No.2) Act 2023.

The measure is expected to have a negligible impact on the administrative burdens of an estimated 7,000 companies that incur qualifying expenditure on plant and machinery which is not already fully expensed through the annual investment allowance. It is not expected that there will be adverse effects on any group sharing protected characteristics. Impact on business including civil society organisationsThe current law for capital allowances is contained within Part 2 of the Capital Allowances Act 2001 (CAA01). The rules on first-year allowances are primarily contained within Chapter 4 Part 2 CAA01 and Sections 52-52A CAA01. Chapter 5 contains provisions on pooling, disposal events and disposal values. Chapter 17 contains various anti-avoidance provisions which apply to first-year allowances.

One-off costs could include familiarisation with the change and updating software to account for the reliefs being made permanent. The current law for full expensing is contained within Section 7 Finance (No.2) Act 2023, which treats certain provisions as having been inserted into Part 2 of CAA01. Proposed revisionsThis measure is expected overall to improve business’ experience of dealing with HMRC as it extends the availability of full expensing and 50% first-year allowances on a permanent basis.