Budget 2024: Leased machinery capital allowance announced

Jeremy Hunt
HM Treasury
Jeremy Hunt

The chancellor Jeremy Hunt has announced leased machinery will become part of the Full Expensing capital allowance in the latest Budget.

Draft legislation will be published within weeks to extend Full Expensing – a £10bn tax cut for business every year to help them invest for less – to leased assets when affordable to do so, strengthening the capital allowance regime.

As part of Full Expensing, which began in April 2023, companies subject to UK corporation tax can receive a 100% first year tax deduction for expenditure they incur on qualifying plant or machinery, essentially reducing the in-year cost of plant or machinery by 25%. Originally announced as a temporary measure – called the Super Deduction – the government subsequently announced that the relief will now remain in place permanently.

On the consultation on leasing, Fhaheen Khan, senior economist at Make UK, said: “Making full expensing permanent was one of the single most supportive changes to the treatment of capital expenditure for UK businesses in the last decade. Manufacturers are one of the biggest users of capital allowances and, widening access to leased assets highlights the Government’s commitment to explore new ways to ensure the UK is an attractive location to invest.

“Extending full expensing to leased assets will especially support smaller manufacturers while, further down the line, the Government should explore whether it can be expanded even further to support sustainability goals by covering refurbished, second-hand technologies.”

Make UK
www.makeuk.org

Company

Make UK

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