Capital allowances regime changes must bring stability

Welcoming to the Treasury’s review of potential reforms to UK's capital allowance regime the CIOT hoped that the result will be changes that bring stability to the tax system and a sustainably supportive treatment of business capital investment for business income and corporation tax purposes.

In its response to the government's consultation the institute recommended that the government should use the opportunity to decide on its longer-term strategy for business investment and capital allowances. In essence the review should include a more strategic consideration of what business investment the government wishes to encourage resulting in changes that have clear policy aims around what is being incentivised.

On how to incentivise capital expenditure the CIOT said the government should consider a broader reform of some aspects of the capital allowances regime and other tools. For example it should consider introducing ‘above the...