Full expensing, explained plainly
A generous relief for companies investing in plant and machinery. And for most smaller businesses, one that quietly changes nothing. Both of those are true, so we will say both.
100% off the tax bill, in year one
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 balance relieved over time. There is no upper limit on the spend, which is what sets it apart from the reliefs below it.
One condition matters before anyone gets excited. It is for companies paying corporation tax only. Sole traders and partnerships cannot use it.
Introduced in 2023, then made permanent
Full expensing has a short but useful history, and the dates are worth getting right.
1 April 2023
Announced at the Spring Budget 2023 and applied to qualifying expenditure incurred on or after 1 April 2023. It was originally set to run only to 31 March 2026.
22 November 2023
At the Autumn Statement the temporary end date was scrapped and full expensing was made permanent, so companies can plan around it rather than race a deadline.
For most SMEs, it changes nothing
Here is the part a lot of firms leave out, because it does not help them sell. The Annual Investment Allowance 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.
So for the great majority of the businesses we deal with, full expensing is a headline that does not touch their bill. It earns its keep for companies spending beyond the £1m limit, where the AIA runs out and the uncapped relief takes over. Telling you that plainly is the point. We would rather you trusted us than oversold you.
How it meets the fixtures in a building
Full expensing applies to plant and machinery, and the fixtures built into a commercial property are plant and machinery. So new spend on qualifying fixtures, in a fit-out, a refurbishment or a build, can fall within it for a company, subject to the usual rules on what qualifies and on second-hand assets.
The care is in the detail. Some fixtures are main-rate and some are special-rate, and the two are relieved at different rates. Knowing which is which, and evidencing it, is exactly the work we do. We identify the qualifying fixtures, split them across the right categories, source every figure, and deliver a report a qualified accountant can review and act on, whether the relief lands through full expensing, the AIA, or the ordinary pools.
Wondering what your fixtures are worth?
Tell us about the company and the property. We will look at the qualifying fixtures and set out the numbers, and your accountant decides which relief is used and how. It costs nothing to ask.