The Chancellor, Rishi Sunak’s ‘get it done’ approach did not really extend to capital allowances. There was a modest lift to Structures and Buildings Allowances.

The capital allowances changes are below:

  • The Structures and Buildings Allowances was introduced in Finance Act 2019 to encourage the construction of new or renovation of existing non-residential structures and buildings. The rate of relief has been increased from 2% per annum spreading the tax relief over 50 years to 3% per annum spreading the relief over a faster 33 years. For corporation and income tax payers the higher rate will be effective from 1 April 2020 and 6 April 2020 (the Operative Date) respectively. Tax payers already claiming the SBA relief can claim the higher rate from the Operative Date onwards. This will mean straddling chargeable periods will have a blended rate of SBA relief.

  • The existing 100% First Year Allowance (Enterprise Zones) for investment by a company on new plant and machinery within designated assisted areas has been extended to 31 March 2021.

  • The expiry of the 100% First Year Allowance (Enhanced Capital Allowance) for energy and water efficient plant and machinery in April 2020 remains unchanged. This is surprising as there is no longer any specific fiscal incentive to invest in energy saving plant.

  • The Annual Investment Allowances (AIA) remains at the temporarily increased rate of £1,000,000 from 1 January 2019 to 31 December 2020, returning to £200,000 thereafter.

Please find below the link to the budget 2020 tax related documents:

If you have any queries, please do not hesitate to contact the team on 020 7329 1300.

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