Full Expensing

Using Full Expensing

What is Full Expensing?

Full Expensing (FE) allows companies to claim 100% capital allowances on qualifying plant and machinery expenditure 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 companies that are within the charge 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 assets.
  • Corporate partners in partnerships are also eligible to claim FE.
  • You can claim FE on most plant and machinery assets purchased outright. It’s also available for assets funded through hire purchase (though not sale and hire purchase back) 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. 

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

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