The Government has announced changes to the Capital Goods Scheme (CGS) that will take effect from 29 July 2026, with the aim of simplifying VAT administration and reducing compliance burdens for businesses.
The changes focus on two key areas:
These changes will apply only to qualifying assets acquired on or after 29 July 2026. Existing CGS rules and thresholds will continue to apply to assets purchased before this date.
The CGS property threshold has remained unchanged since the scheme was introduced in 1990, despite significant increases in property values over that period. Increasing the threshold and removing computers from the scheme is intended to reduce the administrative complexity associated with CGS adjustments and limit the number of businesses required to monitor and review assets over the adjustment period.
While these changes will be welcome news for many organisations, businesses undertaking significant property developments or capital expenditure projects should continue to consider the potential VAT implications at an early stage to ensure the correct treatment is applied.
If you would like to understand how these changes could impact your business or have any questions about the Capital Goods Scheme, our specialist VAT team would be pleased to help.
To find out more about how we can support you, explore our VAT and duty accountancy services here.
What changes are being made to the Capital Goods Scheme from 29 July 2026?From 29 July 2026, computers and computer equipment will no longer fall within the scope of the Capital Goods Scheme, and the threshold for land, buildings and civil engineering works will increase from £250,000 to £600,000, exclusive of VAT. The changes are intended to simplify VAT administration and reduce compliance burdens for businesses.
When do the new Capital Goods Scheme rules come into effect?The new Capital Goods Scheme rules take effect on 29 July 2026. The changes apply only to qualifying assets acquired on or after this date, while existing rules and thresholds continue to apply to assets purchased before 29 July 2026.
What is the new Capital Goods Scheme threshold for property?The Capital Goods Scheme threshold for land, buildings and civil engineering works will increase from £250,000 to £600,000, exclusive of VAT, from 29 July 2026. The threshold had remained unchanged since the scheme was introduced in 1990, despite significant increases in property values over that period.
Will computers still be included in the Capital Goods Scheme after July 2026?No, computers and computer equipment will no longer fall within the scope of the Capital Goods Scheme for qualifying assets acquired on or after 29 July 2026. Removing computers from the scheme is intended to reduce the administrative complexity associated with Capital Goods Scheme adjustments.
Why is the Government changing the Capital Goods Scheme?The Government is changing the Capital Goods Scheme to simplify VAT administration and reduce compliance burdens for businesses. Increasing the property threshold and removing computers from the scheme are intended to reduce the number of businesses required to monitor and review assets over the adjustment period.
Do the Capital Goods Scheme changes apply to assets bought before 29 July 2026?No, the Capital Goods Scheme changes do not apply to assets purchased before 29 July 2026. Existing Capital Goods Scheme rules and thresholds will continue to apply to assets acquired before the changes take effect.
Which businesses need to consider the VAT impact of these changes?Businesses undertaking significant property developments or capital expenditure projects should consider the potential VAT implications of the Capital Goods Scheme changes at an early stage. This helps ensure the correct VAT treatment is applied when planning qualifying investments.
Can businesses get advice on how the Capital Goods Scheme changes affect them?Yes, businesses can seek advice on how the Capital Goods Scheme changes may affect them or ask questions about their VAT position. Specialist VAT support can help businesses understand the correct treatment to apply following the changes taking effect on 29 July 2026. You can find more information about VAT services for further support.
Share this article
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Related people
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Our complimentary newsletters and event invitations are designed to provide you with regular updates, insight and guidance.
You can unsubscribe from our email communications at any time by emailing [email protected] or by clicking the 'unsubscribe' link found on all our email newsletters and event invitations.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
