Predevelopment Costs Consultation Deadline Approaches
The government is consulting on how predevelopment costs should be treated for tax purposes, with responses due by 11:59pm on 21 September 2026. This matters if your business is planning major investment because a significant Supreme Court ruling affects capital allowance claims.
Predevelopment costs are expenses incurred before a project formally starts: feasibility studies, survey work, regulatory approvals, site assessments, and preliminary design. Until recently, businesses assumed these qualified for capital allowances. But in April 2026, the Supreme Court decision in the Orsted case found that survey and study expenditure for windfarm construction did not attract capital allowances.
Why this matters: If you are a startup founder or Ltd director planning significant investment, predevelopment costs could be substantial. If these do not qualify for capital relief, they sit in a tax vacuum.
The consultation seeks evidence on types and scale of predevelopment costs, how they are currently treated, and impact on investment decisions. This is your opportunity to make the case that the current rule creates unfairness.
Action: If your business is planning major capital investment, review the consultation and respond. HMRC wants real examples: costs incurred, amounts involved, and how uncertainty affects investment timing. Email responses to predevcosts@hmtreasury.gov.uk by 21 September.