The Office of Tax Simplification (OTS) published their verdict on the future of Capital Allowances (CA’s) in June 2018.

    The OTS were considering the option of replacing CA’s with accounting depreciation in the corporation tax computation. There has been a lengthy consultation with the business community and their advisors to explore the pros and cons of such a change. The OTS concluded that depreciation should not replace CA’s.

    The OTS explained that whilst the replacement of CA’s with accounting depreciation is doable it would most likely lead to more complexity and therefore it is probably best to leave it as it is for the foreseeable future.

    An alternative would be to widen the scope of CA’s generally and tinker with the Annual Investment Allowance (AIA).

    So, its business as usual for now but look out for the changes to the scope of what can be claimed.