UHY Hacker Young | Chartered Accountants

Finance Budget Update: Changes to Capital Allowances

16 January 2019

In the last finance budget, which is being finalised in parliament, the publicity was about the changes to capital gains tax affecting the amount of exempt gains from principle private residence relief.

But other changes like capital allowances will affect the property sector:

  • Increase of the annual investment allowance from £200,000 to £1m. This increase is only from 1 January 2019 to 31 December 2021. Commercial landlords need to look at their expenditure plans to maximise the relief.
  • While the above is welcome some changes take away or reduce reliefs for capital expenditure, like the reduction from 8% to 6% relief from April 2019 on the writing down allowance of the special rate pool of plant machinery, thermal insulation and integral features.
  • The ending of the 100% allowances for capital equipment on the energy technology and water technology lists from April 2020. Commercial landlords need to review their expenditure plans on these items to ensure they obtain the best relief.
  • A new capital allowance was introduced for structures and building allowance. Expenditure after 29 October 2018 and expenditure on non-residential property on eligible construction costs will obtain a 2% straight line allowance. So developers need to understand qualifying expenditure to enable them to provide details to the ultimate owners of the property.

There are more changes and we will continue to update you on a regular basis in the future.

Further information

For more information on how these changes could affect you, please contact me or your local UHY tax adviser.