Full expensing has been made permanent: who it actually helps
At the Autumn Statement on 22 November 2023 the Chancellor made full expensing permanent. It is a generous relief for companies, but for most SMEs the AIA already covers the ground. Here is the honest version.
- Full expensing was made permanent at the Autumn Statement on 22 November 2023.
- It gives companies 100% first-year relief on main-rate plant, 50% on special-rate, with no cap.
- For most SMEs under £1m of spend, the AIA already does the same job.
In today’s Autumn Statement, 22 November 2023, the Chancellor made full expensing permanent. It had been introduced only that April with an end date of 31 March 2026, and now that deadline is gone. It made a good headline. For the businesses we work with, the honest picture is a little quieter than the headline suggests, and we would rather give you that than the sales version.
What full expensing is
Full expensing lets a company write off the full cost of qualifying plant and machinery against its taxable profits in the year it spends the money. Main-rate assets get a 100% first-year allowance. Special-rate assets, the longer-life and integral-features kind, get 50% in the first year, with the rest relieved over time. There is no upper limit on the spend, and that uncapped nature is the whole point of it.
One condition matters before anyone gets carried away. It is for companies paying corporation tax only. Sole traders and partnerships cannot use it.
Who it actually helps
The honest answer is companies spending big. Beyond £1m of qualifying plant and machinery in a year, where the Annual Investment Allowance runs out, full expensing takes over and keeps the relief flowing with no ceiling. For a company investing at that scale, it is genuinely valuable.
Who it does not change anything for
Most SMEs. The AIA already gives 100% relief on up to £1m of qualifying plant and machinery every year, and it is open to companies, sole traders and partnerships alike. If your spend sits under that £1m line, the AIA has you covered already, and full expensing adds nothing on top.
A lot of firms will not tell you that, because it does not help them sell. We are telling you because trust is the thing we are actually building here. For the great majority of our clients, full expensing is a headline that does not touch their bill.
Where property fits
Full expensing applies to plant and machinery, and the fixtures built into a commercial property are plant and machinery. So for a company, new spend on qualifying fixtures in a fit-out, a refurbishment or a build can fall within it, subject to the usual rules. The care is in splitting main-rate from special-rate and evidencing which is which. That is the work we do.
If you are not sure whether any of this touches your position, tell us about the company and the property. We will look at the qualifying fixtures and set out the numbers, and your accountant decides how the relief is used. It costs nothing to ask.