Tax Treatment of Predevelopment costs
The government is consulting on the tax treatment of predevelopment costs. The consultation seeks views and evidence from stakeholders on the types of costs incurred, their treatment under the current rules, and the impact on investment decisions.
The government committed in the Corporate Tax Roadmap to provide greater certainty for businesses to invest, including by providing greater clarity on what qualifies for different capital allowances.
After a lengthy litigation process, the Supreme Court has now issued its judgment in the case of Orsted West of Duddon Sands (UK) Ltd and others v HMRC [2026]. In line with the commitment in the Corporate Tax Roadmap, the government is now consulting to understand whether businesses are uncertain the current tax treatment of predevelopment costs as well as the commercial impact of the current legislation.