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Capital Allowances Package Introduced to Spur UK Growth

September 12, 2023

The new fiscal year in the UK has brought a capital allowances package designed to increase investment and spur growth in the country. The package includes a £27 billion cut to corporation tax via a new full expensing policy. This policy is expected to boost investment by three per cent in each of the next three years, making it an attractive prospect for businesses looking to invest.

Other tax changes also coming into effect include extending business rates relief, a cut to fuel duty, and up to a £450 income tax reduction for carers. These changes will provide a much-needed relief to individual carers and a boost to businesses across the country, particularly those that have been adversely affected by the pandemic.

Companies are encouraged to take advantage of the new tax cuts, which comprise 100 per cent full expensing and a 50 per cent first-year allowance. The UK will have the most generous capital allowance regime in the OECD, saving firms up to 25p in every £1 of qualifying investment. This is a significant advantage for companies looking to invest in the country.

The changes to air passenger duty are also notable, with a new domestic band set at £6.50 to increase UK-wide connectivity, and a new ultra-long-haul band set at £91 for passenger seats with pitch of less than 40 inches. These changes will make it easier for people to travel within the country and beyond.

Further tax measures include cancelling the planned 11p rise in fuel duty, increasing the Annual Investment Allowance permanently to £1 million, and expanding the Seed Enterprise Investment Scheme investment limit up to £250,00 to help over 2,000 start-up companies access finance. These measures will provide a much-needed boost to the economy and help businesses to grow and thrive.

The government is determined to make the UK the best place in the world to do business. With these tax cuts and other measures, they are fostering the right conditions for enterprise, investment, and growth. Companies of all sizes are encouraged to take full advantage of these reforms and invest in the future of their businesses.

If you need advice on the capital allowances package, don’t hesitate to reach out to us. We are here to help businesses navigate these changes and take advantage of the opportunities they present.

Gary Olding

Gary is the National Head of Tax and oversees our Tax Compliance and Medical Tax Teams. When not dealing with clients he is supervising operations, troubleshooting, and optimising workflows.

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