HMRC updates guidance for claiming new allowance
Qualifying expenditure on plant and machinery can qualify for a 40% first-year allowance from 1 January 2026. HMRC has now updated its guidance to help make claims. What do you need to do?
-
Accounting for VAT if there is no cash payment
Your business has submitted repayment returns for the last two quarters and you are concerned that you might have underpaid output tax on some supplies where no money has changed hands. Are your concerns justified?
-
Treatment of distributions under review
The government has launched a consultation on modernising the tax treatment of distributions and repayments of capital by companies. The proposals could affect the distinction between dividends taxed as income and capital payments subject to CGT. What changes are being considered?
-
Tax relief on equipment you haven’t paid for (yet)
The timing of tax relief for purchases of equipment isn’t straightforward when payments are delayed or goods are purchased through hire purchase (HP) agreements. How can you use these rules to your advantage and get tax relief before you’ve paid the final invoice?
The new 40% first-year allowance (FYA) is available to companies as well as unincorporated businesses. Perhaps the biggest winners will be companies that purchase assets and lease them out, as these assets are excluded from full expensing, and so 100% relief is limited to the £1 million annual investment allowance. Until this year, the only option for relieving any excess was through writing down allowances on a reducing balance basis. A claim needs to be made on the corporation tax return, but HMRC’s corporation tax online service will not be updated for the new allowance until 2027. A company that wants to make a claim in the meantime, e.g. one with a year end of 31 March 2026 filing this year, will need to use a workaround. HMRC has now updated its guidance, saying that claimants should use:
- boxes 725 or 750 for claim amounts
- box 760 for qualifying expenditure
This website uses both its own and third-party cookies to analyze our services and navigation on our website in order to improve its contents (analytical purposes: measure visits and sources of web traffic). The legal basis is the consent of the user, except in the case of basic cookies, which are essential to navigate this website.