Spring Budget 2024 – Capital Allowance updates
Updated: 7 March 2024, 5.18pm
Full expensing for leased plant and machinery
As part of the Autumn statement in 2023 the chancellor announced that Full Expensing, which is a 100% first year allowance on new and qualifying plant and machinery (which replaced the 130% Super Deduction in April 2023) would become permanent (along with the 50% SR Allowance for special rate assets).
Expenditure on plant and machinery for leasing is currently excluded from these allowances.
The government has confirmed today that they will shortly publish draft legislation for a technical consultation, to help them consider any potential extension to include plant and machinery for leasing – which was forewarned by the chancellor as potentially available “when fiscal conditions allow”.
It will be interesting to understand what these fiscal conditions are and when they will be met. We will watch closely as the details unfold.
Abolition of the Furnished Holiday Lettings (FHL) tax regime
The government announced as part of the Spring 2024 Budget that the FHL regime, which includes short stay rental properties has been abolished and will take effect from April 2025.
We await the draft legislation to see the full impact of this measure, however we expect the following to be affected:
Entitlement to claim capital allowances tax relief for plant and machinery, which includes fixtures, fittings, furniture, and equipment. This also includes the availability of 100% Annual Investment Allowance and for corporate entities the 100% Full Expensing / 50% SR Allowance.
Capital Gains Tax (CGT) reliefs for traders such as rollover relief and mitigation of CGT on disposal of a property.
Restrictions for finance and interest did not apply to loans and mortgages on FHL properties.
In light of the above measure, now would be a good time to assess whether all of the historic expenditure on an FHL property has been optimised for tax relief through capital allowances (subject to meeting the full criteria).
For more information on making a claim please reach out to Phoebe Hindlet at phoebe@mjs.tax / 01666 330 595.
