The first year allowance (or full expensing)

Full circle

The latest changes to the capital allowances regime were part of the Tax Plan published at Spring Statement 2022. The Tax Plan acknowledged that ‘business investment has been a long-standing weakness in the UK’ and noted that the overall tax treatment provided for capital investment in the UK was less generous than the OECD average. In consequence the government would be considering reforms to best support future business investment following the end of the super-deduction in April 2023.

First year allowances (FYAs) and full expensing were given as two different options in the Tax Plan published in 2022. Example rates of 40% and 13% for main and special rate items were given for the former whilst the latter was described as allowing ‘all qualifying expenditure to be written off in the...