Will the Spring Budget 2024 change Capital Allowances?

As the Spring Budget approaches, (6th March 2024), you might be eagerly anticipating potential changes in tax policy that could significantly influence your investments.

The Importance of the Spring Budget

With the possibility of a general election looming, scheduled no later than January 2025, this budget holds added significance, potentially posing one of the final opportunities for substantial policy shifts before the nation heads to the polls.

Simplification of Capital Allowances and First Year Allowances

The introduction of permanent full expensing in the 2023 statement marked a big step towards simplifying the tax system. This measure provides 100% first year allowances on qualifying plant and machinery investments for companies, streamlining processes and incentivising immediate investment.

Supporting Measures and the Annual Investment Allowance (AIA) Limit

Further bolstering these efforts, 2023’s budget announced the extension of the 50% first-year allowance for special rate assets, and the continuation of the Annual Investment Allowance (AIA), offering 100% relief for plant and machinery investments up to £1 million.

Expert Insights Surrounding Full Expensing

In line with these developments, a recent analysis by Whiting’s LLP noted, “The introduction of permanent full expensing in the Autumn Statement was a welcome simplification of the business tax system. However, it only applies to expenditure on plant and machinery and to companies. we may therefore see further measures to simplify the capital allowances legislation, although this is unlikely to grab the desired headlines.”

Anticipating Further Reforms

As businesses await the Spring Budget, they are keenly anticipating further clarity on potential reforms and their implications for investment strategies. While Capital Allowances reforms may not grab the headlines, their impact on business decisions and the economy cannot be understated. The Spring Budget presents a crucial opportunity to continue this journey towards a more efficient and supportive tax environment for businesses across the UK.

Stay Tuned For Updates

Keep an eye on our blog page – we’ll post the updates from the Spring Budget as soon as it’s available! We’re looking forward to seeing what news hits the headlines on the 6th March!