Capital Allowances – 2023 Budget Update

The Spring Budget 2023 saw the Chancellor announce a new “Full Expensing” capital allowances offer that will apply between April 2023 and March 2026, replacing the current capital allowances super deduction. But what does this mean in practice? 

The good news is that companies with non-ring-fenced profits over £250,000, and who were bracing themselves for the impact of the forthcoming Corporation Tax rise from 19% to 25%, will not feel the full impact of this rise provided they continue to make and accelerate capital investments in their businesses. Instead, they can claim 100% capital allowances on plant and machinery investments and 50% for expenditure incurred on special rate expenditure (including long life assets) until 31 March 2026. Other businesses such as unincorporated businesses and partnerships will still be able to benefit from the Annual Investment Allowance (AIA) which provides 100% first-year relief for plant and machinery investments up to £1,000,000.

In practice this means that until April 2026, for every £1 invested in qualifying expenditure, companies can save up to 25p on their tax bill. This is actually a slightly enhanced financial recovery compared with the current 130% super deduction, as the table illustrates.

Our specialist Capital Allowances team have successfully partnered with numerous clients to help them recover a significant percentage of their investment over the life of the project, and they will continue to provide this expert help under the new ‘full expensing’ regime. For more information about this service click here or email Patrick at

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