The annual rate of allowances for expenditure included in the Special Rate pool is reduced from 8% to 6% from 1 April 2019 for corporate tax and 6 April 2019 for income tax. Although you will still get a full tax deduction for the expenditure included in this pool, this change extends the time over which the tax relief is available.
An announcement has also been made to eliminate Enhanced Capital Allowances (‘ECA’) for energy and water efficient plant and machinery from 1 April 2020. A first-year allowance of 100% is currently available for qualifying items and can be claimed over and above the AIA. If you are looking to purchase any items which are included on the ECA lists, and your capital expenditure will exceed your available AIA, the timing of this expenditure should be considered to maximise the impact on your cashflow.
Finally, it was also announced that the availability of 100% First year allowances for Electric Charge Points will be extended to 31 March 2023 for CT and 5 April 2023 for IT. This was introduced to encourage the use of electric vehicles by businesses.
If you would like to discuss any of the changes to the Capital Allowances in the budget please contact our specialist Lesley Connon, Corporate Tax Senior Manager (email@example.com) or your usual AAB contact