Budget update: Annual Investment Allowance extension

Hillier Hopkins LLP

Chartered Accountants & Tax Advisers

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The Chancellor in his Budget yesterday extended the £1m annual investment allowance limit to 31 March 2023.

It is a decision that will be welcomed by businesses that are looking to make capital investment in plant and machinery costing over £200,000.

The annual investment allowance was set at £200,000 in 2016 and temporarily increased to £1m in 2019 for a two-year period, extended in November 2020 for a further year.

In the 2021 Spring Budget a ‘super deduction’ was introduced for qualifying expenditure up to March 2023.

Yesterday’s Budget will extend the temporary £1m limit to March 2023, meaning that both the super deduction and the temporary £1m limit end at the same time.

What does this mean for businesses?

The measure is designed to encourage businesses to bring forward any capital expenditure plans into the qualifying period and there may be good reasons to do so.

Businesses that make qualifying expenditure by the 31 March 2023 will benefit from accelerated tax deductions.

HMRC is generous in what it considers qualifying expenditure and some examples are:

  • Computer equipment and servers
  • Tractors, lorries, vans
  • Ladders, drills, cranes
  • Office chairs and desks,
  • Electric vehicle charge points
  • Refrigeration units
  • Compressors

However, not all spend will qualify and advice should be sought.

For more information please get in touch with your usual Hillier Hopkins contact.

Do you need extra information?
Liam Henry

Liam has developed a specialism in the property and construction industry, particularly in relation to the taxes that have a specific impact in this area, such as CIS and VAT.

Contact Liam at liam.henry@hhllp.co.uk or on 01923 634416