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Corporation Tax

Capital Allowances
A Corporation Tax 100% First Year Allowance was introduced in the Spring Budget for the period 01 April 2023 to 31 March 2026. Known as ‘full expensing‘, this replaced the 130% super-deduction, which ended on 31 March 2023. In addition, a 50% first-year allowance was introduced for ‘Special Rate‘ expenditure. So, there is:

– Full expensing at the main rate of 100% for any expenditure that is not ‘special’
– A 50% allowance is available for expenditure that is special (e.g. expenditure on thermal insulation, integral features and long-life assets)

The Autumn Statement confirmed that both the 100% and 50% would be made permanent, with no end date. The fact they have been made permanent does reduce the impact of the earlier rises in Corporation Tax rates, is good for business and gives certainty to accountants.

There will also be a consultation on extending full expensing to include assets for leasing.

Research and Development Tax Reliefs
In 2023/24, there are two schemes that can be used to get a Corporation Tax credit against qualifying Research & Development (R&D):

– The Research and Development Expenditure Credit (RDEC) and 
– The small or medium enterprise (SME) R&D relief

These will be merged, and for accounting periods beginning on or after 01 April 2024, R&D credit must be claimed in the merged scheme. Furthermore, the ‘intensity threshold‘ in the additional support for R&D intensive loss-making SMEs will be reduced from 40% to 30%.

Further details of this merged scheme will be provided at a later date as they are not currently available.

Also, in line with other similar changes for other taxes, R&D claimants will no longer be able to nominate a third-party payee for R&D tax credit payments, e.g., to a repayment agent. From 22 November 2023, credit payments can no longer be assigned to the repayment agent and will be repaid directly to the company making the claims.

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