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What does full expensing include?| Full expensing of capital purchases

What does full expensing include?| Full expensing of capital purchases

Mike Wakeford

What is full expensing?
Full expensing gives a 100% first-year capital allowance for qualifying plant and machinery assets and came into effect last April. To qualify for full expensing, expenditure must be incurred on providing a “main rate” plant or machinery. Full expensing is only available to companies subject to Corporation Tax.

What can I buy with full expensing?
Plant and machinery that may qualify for full expensing include (but is not limited to):
  • machines such as computers, printers, lathes and planers;
  • office equipment such as desks and chairs;
  • vehicles such as vans, lorries and tractors (but not cars);
  • warehousing equipment such as forklift trucks, pallet trucks, shelving and stackers;
  • tools such as ladders and drills;
  • construction equipment such as excavators, compactors, and bulldozers; and
  • some fixtures, such as kitchen and bathroom fittings and fire alarm systems in non-residential properties.
As well as using full expensing on qualifying plant and machinery, you can also use full expensing on other qualifying capital allowances.  
When the full expensing rules were first announced, the relief was set to apply until 31 March 2026. The Autumn Statement 2023 extended this deadline and announced that full expensing would be made permanent. Legislation will be introduced to remove the 2026 end date.

Under full expensing, for every pound a company invests, their corporation taxes will be cut by up to 26.5p. For “special rate” expenditure, which does not qualify for full expensing, a 50% first-year allowance (FYA) can currently be claimed instead. Please note, the actual tax saved will vary according to the company’s marginal rate of tax.

Businesses can also continue to use the Annual Investment Allowance (AIA) to claim a 100% tax deduction on qualifying expenditure on plant and machinery of up to £1m per year. This includes unincorporated businesses and most partnerships.
Contact Us
If you're unsure how to utilise full expense on your plant and machinery assets, contact Moore (South) today. We can support you in understanding how to use full expensing, which can help you save money supplying your business. Find out more by contacting our dedicated tax team today.