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October 27th 2021

Autumn Budget 2021: business tax measures

Annual Investment Allowance held at £1m until 31 March 2023

The limit of the annual investment allowance (AIA) will be held at £1,000,000 for qualifying expenditure on plant and machinery incurred during the period from 1 January 2022 to 31 March 2023.

The AIA was introduced from April 2008, which most businesses, regardless of their size and subject to certain conditions (specified below), can claim on their qualifying expenditure for plant and machinery. Its permanent limit was set at £200,000 from 1 January 2016.

The AIA is a 100% capital allowance for qualifying expenditure on plant and machinery up to a specified annual limit. Businesses claim the AIA in respect of expenditure which would otherwise be eligible for writing down allowances (WDAs). Given at either the main or special rates, WDAs provide relief for eligible capital expenditure over a number of tax periods. The AIA therefore accelerates relief, typically simplifying processes for businesses and aiding their cashflow.

AIA is not available for all capital expenditure on plant and machinery, such as expenditure on cars. Further details on the categories of capital plant and machinery expenditure that do not qualify for AIA are set out in section 38B of CAA.

Legislation will be introduced in the Autumn Finance Bill 2021-22 to maintain the current temporary £1,000,000 AIA limit for one year and three months from 1 January 2022, which will align the end of the temporary AIA limit with the end of the super-deduction.

Transitional rules will apply where a business has a tax period that spans the operative date of 1 April 2023 for the reversion of the AIA limit to £200,000. Under such rules, the maximum AIA available should be calculated in two parts, with apportionments made on a just and reasonable basis.

Cultural Reliefs

The government intends to raise the rates of three corporation tax reliefs that are collectively referred to as the ‘cultural reliefs’: Theatre Tax Relief (TTR), Orchestra Tax Relief (OTR), and Museums and Galleries Exhibition Tax Relief (MGETR).

This is intended as a temporary measure to have beneficial outcomes for the sector in the UK’s economic recovery from coronavirus (COVID-19). As such, the rate increase is intended to last for two years and five months beginning from 27 October 2021. The rates will taper down from 1 April 2023 before returning to current levels from 1 April 2024. Details of the rate rises (and the current rates of relief) are in the table below. The rises will apply where production activities commence on or after 27 October 2021.

The government intends to increase the rates of the cultural reliefs for the next two years in the following pattern, with rates for 2023 to 2024 returning to the current (2021 to 2022) levels:

Rate %Current RatesFrom 27 October 2021 to 31 March 20232023 to 20242024 to 2025 (and onwards)
TTR: non-touring / touring20/2545/5030/3520/25
MGETR: non-touring / touring20/2545/5030/3520/25

HMRC has also confirmed that MGETR, which had been due to expire in March 2022, will now be extended until March 2024.

Alongside the raising of the rates of relief, the government is also taking the opportunity to clarify some of the relief rules, such as making it easier for touring museum and gallery exhibition production companies to claim relief for touring.


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