HM Treasury has recently published a document inviting views on capital allowances reforms. ACCA will be meeting with policy teams at HMRC and HM Treasury in mid-June and we’re keen to hear from members on areas of the capital allowances regime that could be improved.
Below is an outline of some of the proposals and discussion points - members are invited to share comments on these and implementation, however minimal or in-depth to UKPolicy@accaglobal.com. We will be following up with respondents shortly.
- Increasing the permanent level of the Annual Investment Allowance (AIA)
- Increasing the rates of Writing Down Allowances (WDAs)
- Introducing general First-Year Allowances (FYAs) for qualifying expenditure on plant and machinery
- Introducing an additional FYA and introducing permanent full expensing – however this, at its peak this could cost over £11 billion pa. If sufficient funding were to be available, the government is interested in stakeholder views about whether this would be best spent on full expensing or better targeted through other options (including non-tax options).
- Respondents can also share views on how government might best to target the approach if less funding is available.
- The government would welcome evidence from stakeholders on how firms make investment decisions, the relative importance of capital allowances in those decisions, and how they are taken into account, such as by reference to net present values, cash-flow benefits or impacts on effective tax rates.
- The government wants to incorporate the latest evidence on the impact of the super-deduction into its decision-making. As part of this, the government is interested in views on how the super-deduction has affected the investment decisions of businesses.
- The government acknowledges that the generosity of UK capital allowances can compare unfavourably to international peers and what more the capital allowances regime can do to support business investment.
- How far do capital allowances rates influence decisions by multinationals on which territory to invest in?
- How good are levels of awareness of the current system and how simple it is to understand and operate, and does it provide adequate support for business investment?
- Do options may impact incentives for firms to use debt over equity finance?
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