Jex capital allowances talk Autumn Budget 2024 Capital Allowances Updates

With a number of key allowances and incentives continuing, Rachel Sanders of jex Capital Allowances  says it is a great time to maximise tax efficiency in your care home property investments.

Rachel states that: “The Autumn Budget delivered on 30 October 2024 appears to provide stability within the Capital Allowances legislation rather than change, with key allowances unaltered for 2024/25:

• Full Expensing remains active.  This allows companies to deduct 100% of their expenditure on new and unused qualifying main pool plant and machinery from their taxable profits in the financial period of expenditure.

•  50% First Year Allowance remains active.  This allows companies to deduct 50% of their first-year expenditure on new and unused qualifying special rate pool plant and machinery from their taxable profits in the financial period of expenditure.

• Annual Investment Allowance (AIA) remains at £1 million.  This allows companies, individuals and partnerships to claim both special rate and main pool allowances at 100% within their year of expenditure, up to a value of £1 million.  This can be extremely worthwhile for small and medium size projects, often allowing a 100% write off immediately. AIA’s apply to both new and second-hand plant & machinery.

Care-home owners should consult their professional advisors on the best way to use the combination of the above first year allowances and annual investment allowance to maximise their tax position as part of their overall tax planning. Early consideration of capital expenditure incurred on projects is always important to maximise reliefs available.

• Land Remediation Relief (LRR) The Chancellor announced that the LRR legislation will be reviewed via consultation in Spring 2025.  However, if you are you considering a care home development or refurbishment project, then you may like to consult with the Jex Capital Allowance team regarding the availability of Land Remediation Relief (LRR). Land Remediation Relief provides significant tax advantages for companies involved in the construction or refurbishment of care homes where there is a requirement to decontaminate land or buildings. This relief allows eligible businesses to claim up to 150% of their qualifying remediation costs against their taxable profits, covering expenses related to cleaning up hazardous substances, removal of asbestos, and other necessary works to ensure the site is suitable for development or refurbishment.  By leveraging this relief, care home owners can significantly mitigate costs associated with development, ultimately enhancing the financial viability of their projects. To claim this relief, the taxpayer must be within the charge of Corporation Tax and not have been responsible for the original pollution.