There was nothing to get too excited about in the Spring statement, however, there was mention of some positive changes being considered for Capital Allowances, which will be developed further prior to the Autumn Budget in time to replace the super-deduction which runs through to April 2023.

The potential reliefs mentioned in today’s announcements are briefly outlined as follows: 

• Increase the level of the Annual Investment Allowance, to a permanent fixed level, for example £500,000. 
• Increasing Writing Down Allowances for main and special rate assets from their current levels of 18% and 6% to 20% and 8%.  
• Introduce a First Year Allowance for main and special rate assets where firms can deduct, for example, 40% and 13% in the first year, with the remaining expenditure written down at standard Writing Down Allowances.  
• Introduce an Additional First Year Allowance, to bring the overall amount that can be claimed to greater than 100% of the initial cost. An additional capital allowance of 20% in the first year, on top of standard Writing Down Allowances on 100% of the initial cost across the first and subsequent years.  
• Introduce full expensing, to allow businesses to write off the costs of qualifying investment in one go. We would have thought this one to be highly unlikely due to the cost to the Treasury. 

The above changes relate to capital expenditure on general plant and machinery, however, the Government may also consider changes to other allowances, such as the Structures and Buildings Allowance, or new reliefs targeted at specific investments. 

As a firm, we would like to see incentives introduced to increase the uptake in making new and current buildings more energy efficient, perhaps by re-introducing a more simplified version of the previous Enhanced Capital Allowances scheme, and also by offering an enhanced level of Structures and Buildings Allowances for green buildings that meet certain specific measured criteria such as EPC A, BREEAM Outstanding, or LEED Platinum.  

For more information or to discuss any of these announcements further, please don't hesitate to get in touch with me or another member of our Construction & Property Incentives team.