UK Predevelopment Costs: Capital Allowances Certainty After Orsted — Respond by 21 September

On 13 July 2026 HM Treasury published a consultation on the tax treatment of predevelopment costs. The paper follows the Supreme Court judgment in Orsted West of Duddon Sands (UK) Ltd and others v HMRC [2026] and sits beside the government’s Corporate Tax Roadmap commitment to give clearer certainty on what qualifies for capital allowances.

As of mid-August you have just over five weeks until the consultation closes at 11:59pm on 21 September 2026 — the same date as the Land Remediation Relief reform consultation. Responses go to [email protected]; HM Treasury is also holding consultative meetings through September for parties that request them.

Plant and machinery capital allowances generally require expenditure "on the provision of" plant and machinery. In Orsted, the Supreme Court held that certain preliminary studies and surveys connected with offshore wind development were not close enough to the plant provided to qualify for those allowances.

HMRC has updated Capital Allowances Manual guidance on professional fees and preliminaries (including CA20070) following the judgment. The government says the decision is clear in the facts before the court, but businesses still face uncertainty about how far the reasoning reaches into wider early-stage design, environmental, and engineering spend on large projects.

HM Treasury wants evidence on the types of predevelopment costs businesses incur before plant and machinery can be installed or operated, how those costs are treated under current rules after Orsted, and how deductibility (or the lack of it) affects investment decisions and UK competitiveness.

The consultation focuses on costs more directly required before plant and machinery can be installed or operated. It is not considering predevelopment costs relating to intangible assets, land transactions, or abortive expenditure. No draft Finance Bill clause rewrites the capital allowances tests yet — this is an evidence-gathering stage ahead of any Budget decision.

Map live and pipeline project budgets into categories that Orsted and HMRC’s updated manuals put in doubt: early surveys, environmental assessments, design iterations before construction, and professional fees that are not clearly "on the provision of" plant.

If tax treatment changes project viability models, prepare a short evidence response with anonymised cost examples — HM Treasury especially wants input from businesses and representation bodies across sectors, not only renewables. Diary Budget 2026 for any policy follow-through; do not rebuild claim files on consultation text alone.

Keep invoices, engagement letters, and design-stage workpapers exportable so advisers can evidence capital vs revenue characterisation under today’s rules while the consultation runs.

Clean project and supplier categories make predevelopment spend easier to review beside Corporation Tax estimates. FinnAccountings helps Ireland and UK businesses prepare bookkeeping and tax packs with Chartered Accountant insight before you or your ICAEW/ACCA or Chartered Accountant (Ireland) adviser files. Start a free trial for review-ready drafts — we prepare records; we do not file Corporation Tax returns or claim capital allowances on your behalf.

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Brownfield remediation teams responding in the same 21 September window should read the Land Remediation Relief consultation briefing.

UK Land Remediation Relief consultation before 21 September →

For the full Legislation Day package that introduced this consultation alongside other draft measures, read the Finance Bill 2026-27 overview.

UK Finance Bill 2026-27 Legislation Day overview →

Use the dual-market tax calculator for high-level Corporation Tax planning estimates only — not a capital allowances computation.

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