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The Government is today publishing two technical notes containing draft legislation on the key new elements of the capital allowances system, announced as part of the package of reforms to the business tax system in Budget 2007. The package of reforms, including a reduction in the headline rate of corporation tax from 30% to 28%, will enhance the international competitiveness of the UK, by encouraging investment, promoting innovation and ensuring fairness across the tax system.
This legislation reflects the comments the Government received in response to the July consultation Business tax reform: capital allowances changes. Today's technical notes include draft legislation covering the new annual investment allowance (AIA), the new classification of features integral to a building, the transitional rules for the move to the new regime and, in a separate document, the new payable enhanced capital allowance for environmentally beneficial and energy-efficient technologies.
Comments on the draft legislation should be submitted by 15 February 2008.
Background
1. As part of the Budget 2007, the Chancellor announced a major package of reform to the business tax system. Details were set out in the Budget document
2. In July 2007, the Government launched a consultation, Business tax reform: capital allowance changes, on the new annual investment allowance of £50,000 for all businesses, the classification of features integral to a building, the new payable enhanced capital allowance for environmentally beneficial and energy-efficient technologies and the transitional arrangements for the move to the new regime.
3. The legislation published today reflects the responses the Government received in response to that consultation. This legislation will be included in the 2008 Finance Bill and will be effective from April 2008.
4. The technical notes and legislation:
