My dashboard45% tax credit over 3 years on new machinery, AI solutions and patents, now extended to 30 June 2029
At a glance
Manufacturing companies get an income tax credit of 15% a year for 3 years, 45% in total, on new plant and machinery (motor cars excluded), now widened to artificial intelligence solutions and patents. Unrelieved credit carries forward for up to 10 years. The scheme was due to expire on 30 June 2026 and Budget 2026-2027 extended it to qualifying investment made up to 30 June 2029, confirmed in the EDB Budget highlights, Annex 1.8.
The Investment Tax Credit is an MRA incentive for manufacturing companies. When you invest in new plant and machinery, the state gives you back a large slice of that cost as a credit against your income tax, and Budget 2026-2027 widened it to cover artificial intelligence solutions and patents as well.
The credit is 15% of the qualifying cost per year for 3 years, so 45% in total. It applies to new plant and machinery, with motor cars excluded, and now also to AI solutions and patents. Any credit you cannot use in a year carries forward for up to 10 years, and the scheme, which was due to expire on 30 June 2026, now covers qualifying investment made up to 30 June 2029.
It is for companies engaged in manufacturing. The size of the business does not matter, but the spending must be on new qualifying assets, and motor cars are excluded across the board.
There is no separate application. You claim the credit in your annual corporate income tax return with the MRA, so keep the invoices and proof of the investment, and ask your accountant to book the credit correctly across the 3 years. The extension and the widening to AI solutions and patents are confirmed in the EDB Budget highlights, Annex 1.8.
Watch out for this
Watch out for the fine print on what counts as qualifying: motor cars never qualify, and the exact legal wording for AI solutions and patents will sit in the Finance Act, so confirm with your accountant or the MRA before you commit big money. Remember too that a credit only reduces tax you actually owe; if the company is loss-making it helps only once you have tax to pay, within the 10-year carry-forward window.
There is no separate application: claim the credit in the company's annual income tax return filed with the MRA, keeping invoices and proof that the plant, machinery, AI solutions or patents qualify. The claim is spread at 15% a year over 3 years, with unused credit carried forward up to 10 years.
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