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Predevelopment costs on major developments

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Business Support

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3 September 2026

A new government consultation examines the tax treatment of predevelopment costs on major developments following a Supreme Court ruling. Discover what it means for your project, which costs are affected and how to prepare before the consultation closes.

Predevelopment costs on major developments

Are you planning a major infrastructure or development project? If so, take note. A new government consultation now examines the tax treatment of predevelopment costs on major developments. Consequently, businesses should pay close attention.

Why the consultation matters

Firstly, this consultation follows recent litigation at the Supreme Court. The Court reached an important decision. Specifically, it found that certain early-stage surveys did not qualify for plant and machinery capital allowances. Likewise, some studies for offshore wind farms also failed to qualify. The reason was clear. These costs were not sufficiently connected to the provision of the plant.

What this means for businesses

As a result, this ruling could affect many businesses. In particular, it affects those incurring significant costs before construction begins. Therefore, some predevelopment costs may not be deductible from business profits. Moreover, these costs can cover several early activities, such as:

Surveys
Environmental assessments
Feasibility work
Other studies needed to decide whether and how a project should proceed

What the consultation explores

Importantly, the consultation focuses on a few key questions. Firstly, it seeks to understand which costs businesses actually incur. Secondly, it examines how well businesses understand the tax treatment after the Supreme Court judgment. Thirdly, it asks whether this treatment affects business and investment decisions. In other words, the government wants real evidence.

Could the rules change?

Currently, the government is not minded to change the tax treatment. However, that position could shift. Indeed, the consultation could lead to changes if the evidence shows real problems. For example, it might act if the current treatment harms investment or UK competitiveness. Until then, though, the existing rules remain in place.

What businesses should do now

Therefore, businesses with major projects should act sensibly. Firstly, consider how your early-stage costs are being treated. Secondly, keep clear records of what each cost relates to. After all, good record-keeping supports any future claim. Remember, the consultation closes on 21 September 2026. So, respond promptly if it affects you.