The chancellor confirmed that from 1 April 2023, the main rate of corporation tax will be 25% with a small profits rate of 19%.

On capital allowances, the government will introduce full expensing for the next three years. Companies incurring qualifying expenditure on the provision of new plant and machinery on or after 1 April 2023 but before 1 April 2026 will be able to claim one of two temporary first-year allowances. These are:

  • a 100% first-year allowance for main rate expenditure – known as full expensing; and
  • a 50% first-year allowance for special rate expenditure.

The full expensing regime, which is uncapped, will commence for expenditures incurred by companies from 1 April 2023 for three years. The government hopes this announcement will encourage capital investment in the UK that is already behind comparable countries. However, we do advise caution to changing project models without understanding the nuances around the timing of spend and the interaction with the trading and pre-trading status of companies

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