Autumn Statement - PwC comments on full expensing becoming permanent

Portia Pierrel, capital allowances director at PwC, says:

“Confirmation that the full expensing regime will be made permanent will be massively welcomed by companies given the increase in the corporation tax rate coupled with the super-deduction relief coming to an end earlier this year. For companies that are investing this is the equivalent of a significant cut in the effective rate of corporation tax in the year of investment, rather than spreading it over the life of the investment.

“The relief provides a significant cash flow benefit and enables businesses to obtain 100% relief in the year of investment on qualifying plant and machinery investments rather than spreading it over a number of years. Making the relief permanent allows more time to plan and will provide much needed certainty on longer term and staged investment plans that the short lived super-deduction relief was not able to offer. 

“Similarly, the announcement that the tax advantages that the new ‘Investment zones’ and ‘Freeports’ will offer will be extended to 10 years rather than the current five year window will provide companies with the confidence and flexibility to make long term UK investments beyond 2026. 

“We also had confirmation that the merging of the R&D schemes will go ahead. This should bring some welcome simplification but there is still uncertainty on how these rules will apply to subcontracted R&D which could result in subcontractors (those hiring the R&D staff) losing out. 

“Promoting high levels of business investment is critical to help stimulate growth and encourage long term investment in the UK. Full expensing is expected to increase annual investment by £3bn a year and £14 billion across the forecasted period. This certainty and longer term vision on investment policy announced today is a welcome  signal that the UK is open for business.”