Treasury’s policy paper on UK capital allowances regime

The government recently published a consultation (tinyurl.com/hmtprukcas) asking for views from industry on the future of the UK’s policy for capital allowances tax relief following the chancellor’s announcements in the March 2022 Spring Statement. Rishi Sunak stated that the government’s tax plan ‘sets out tax cutting options on business investment and innovation with final decisions to be announced in the autumn Budget’ as a key element of government policy to address the longstanding weakness of UK private sector investment and the resulting productivity gap against our international competitor countries – ‘with UK investment considerably lower than the Organisation for Economic Co-operation and Development average of 14%’.

This initial step is very welcome in reversing the trend of eroding tax reliefs in this area started by Gordon Brown with the then shock announcement of the abolition of industrial building allowances in March 2007 and...