What is Full Expensing?
In the Spring 2023 Budget, a new tax allowance Full Expensing (FE) was announced to encourage investment and growth. The new allowance available from 1st April 2023 to 31st March 2026 allows companies to claim 100% capital allowances on qualifying plant and machinery investments that would usually qualify for capital allowances at 18% per annum.
Additionally, there is a first-year allowance (FYA) of 50% for assets that would usually qualify for the special rate capital allowances of 6% per annum.
How does it work?
- The tax incentive enables incorporated businesses that are subject to corporation tax to deduct the full cost of new and unused plant and machinery from their taxable profits in the year of purchase rather than over the lifetime of the asset.
- You can claim FE on most plant and machinery assets purchased outright. It’s also available for assets funded through hire purchase and certain types of leased assets.
- Qualifying plant and machinery includes, but is not limited to, warehousing equipment, manufacturing equipment, construction equipment, commercial vehicles (not cars) and computer and office equipment
- Eligible assets for 50% FYA include, but are not limited to, solar shading, electrical and lighting systems.
- Items must be bought and owned (or treated as owned), not gifted to you, and if you end up selling an item that benefited from FE or the 50% FYA, then you may have to pay tax subsequently.
Tax reliefs referred to are those applying under current legislation which may change. The availability and value of any tax reliefs will depend on your individual circumstances. Only companies who are subject to corporation tax can take advantage of the Full Expensing tax incentive.
Visit the Government website for more information about FE.
How can Lombard help?
At Lombard, we are here to support you at every stage of your journey. Our specialism is asset finance, which we’ve been doing it for over 150 years. We provide asset finance for firms of all sizes, from small family concerns to large commercial enterprises and across sectors, from manufacturing to renewable energy, technology, agriculture and vehicles and fleets
Security may be required. Product fees may apply. Finance is only available for business purposes.