Full expensing is a capital allowance that lets a company deduct 100% of the cost of new main-rate plant and machinery from its taxable profits in the year of purchase, with no upper limit. It is not available to sole traders or partnerships.
What qualifies
Full expensing applies to spending by a company, on or after 1 April 2023, on plant and machinery that is new and unused.
| Type of asset | First-year allowance |
|---|---|
| Main-rate assets, such as machines, computers, vans and office equipment | 100% |
| Special-rate assets, such as the integral features of a building and long-life assets | 50%, with the rest going to the special rate pool |
Cars, second-hand assets and assets bought to lease out are generally excluded.
When the asset is sold
Because the whole cost was relieved up front, selling a fully expensed asset brings a balancing charge: the sale proceeds are added back to taxable profit (half of them, where the 50% allowance was claimed).
How it compares with the AIA
The annual investment allowance gives the same 100% relief, covers second-hand assets and is open to unincorporated businesses, but is capped at £1 million a year. Full expensing has no cap.
Read more: Capital allowances and The CT600 capital allowances boxes.