15 March 2023 l BUDGET 9 Capital allowances Companies incurring qualifying expenditure on the provision of new plant and machinery from 1 April 2023 until 31 March 2026 will be able to claim a 100% first-year allowance for main rate expenditure, or a 50% first-year allowance for special rate expenditure. These temporary allowances may be extended beyond 31 March 2026. The £1 million limit for the annual investment allowance will be made permanent, as previously announced. The first-year allowance for electric vehicle charge points is extended until 31 March 2025 for corporation tax and 5 April 2025 for income tax, also as previously announced. Research and development (R&D) A new credit rate will be available to loss-making companies whose R&D expenditure constitutes at least 40% of their total expenditure. From 1 April 2023, qualifying companies can claim a payable credit rate of 14.5% for qualifying R&D expenditure instead of the 10% rate under the existing R&D small and medium-sized enterprise (SME) scheme. The R&D reliefs will be reformed, as previously announced, generally for accounting periods starting on or after 1 April 2023. There will be two new categories of qualifying expenditure for R&D relief – data licences and cloud computing services. Companies will have to inform HMRC of their intention to make a claim for R&D relief using a new digital form, unless they have claimed R&D reliefs in the previous three years. A digital additional information form will have to accompany claims made on or after 1 August 2023. The previously announced restriction on some overseas expenditure will come into effect from 1 April 2024 instead of 1 April 2023. > THINK AHEAD Your business might be entitled to a valuable R&D tax credit – even if it doesn’t make a taxable profit. Check out the new position; you might be surprised what expenditure may now qualify and how much it could be worth to you.
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