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Capital Investment

R&D tax relief
In the previous 2021 Autumn Budget the Chancellor announced that the system for claiming relief for investment in Research and Development (R&D) was to be reformed. This reform was confirmed in this Spring Statement; meanwhile, all cloud computing costs associated with R&D, including storage, will now qualify for tax relief as from April 2023. The definition of R&D for tax reliefs is also to be expanded to include pure mathematics as a qualifying cost. The intention is to include support for investment by companies that work with artificial intelligence, quantum computing and robotics.

Capital Allowances
From 1 April 2021 to 23 March 2023 the ‘super-deduction allowance’ enables companies investing in qualifying new plant and machinery assets to claim:

– a 130% super-deduction capital allowance on qualifying plant and machinery investments
– a 50% first-year allowance for qualifying special rate assets

The Chancellor noted that this relief is to cease in a year’s time and confirmed that he would be looking at ‘fixing that’ in the Autumn 2022 Budget.

Energy saving measures
The Chancellor is still looking to the future of energy saving measures by extending the 0% VAT relief available for installing such items as heat pumps, solar panels and insulation in people’s homes for the next five years. The government estimates that ‘a typical family having roof top solar panels installed will save more than £1,000 in total on installation, and then £300 annually on their energy bills’. Complex eligibility conditions for this relief are to be removed, making the measure available to more households however, not every ‘typical family’ will be able to afford to install these alternative energy sources.

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