Full Expensing

Full Expensing was introduced in April 2023 for companies as a successor to Super Deductions, which had been in place for the preceding few years, to continue the government’s strategy to encourage investment.  This was initially given a 3 year life period but has since been made permanent.

The tax relief provides 100% full tax relief for qualifying assets in the year of expenditure and applies to main pool Plant and Machinery expenditure that is new and unused.

As this reflects a First Year Allowance, there are the standard legislative restrictions in place including that for second hand assets or those bought for leasing.  Importantly, however, there are exceptions for leases of background plant and machinery, including fixtures and other assets for building functionality, contained in SI 2007/303.

Typical anti-avoidance restrictions are in place for areas such as connected parties and special disposal rules provide for future sales proceeds with careful interaction required with the Annual Investment Allowances regime to seek the most beneficial treatment.