Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what metrics her Department will use to evaluate the success of the new first-year allowance in stimulating growth and productivity.

The government has introduced a new 40% first-year allowance (FYA) from 1 January 2026. This is a permanent new feature of the capital allowance regime. This new FYA will allow businesses to deduct much of the cost of their investment in the year they make that investment and lower their tax bill. Crucially, this FYA will be available for assets bought for leasing and for unincorporated businesses which do not benefit from full expensing, increasing the amount of relief that can be claimed in the year of investment.

For future investment, the present value and cost of capital for businesses that claim the new FYA remains broadly the same when considered alongside the changes to writing down allowances also announced at Budget. The expected impacts of this measure and planned monitoring are set out on gov.uk:

Capital allowances: new first-year allowance and reducing main rate writing-down allowances - GOV.UK

This policy is UK-wide and so businesses across all regions of the UK can claim this allowance. We are attracting international investors to opportunities across the country, with the £10 billion of investment commitments announced at our recent Regional Investment Summit.