Glossary · UK
What is Full Expensing?
A UK corporation tax incentive (from April 2023) allowing companies to deduct 100% of the cost of qualifying plant and machinery in the year of purchase, with no cap.
Full Definition
Full expensing is a permanent UK corporation tax relief, introduced from 1 April 2023, that allows companies subject to corporation tax to deduct 100% of the cost of qualifying new main-rate plant and machinery (such as computers, machinery, and most other business equipment) in the year of purchase, with no monetary cap. A separate 50% first-year allowance applies to qualifying special-rate assets (such as long-life assets and integral features of buildings). The relief replaced the super-deduction (which expired on 31 March 2023) and was made permanent in the Autumn Statement 2023. Full expensing is only available to incorporated companies paying corporation tax; unincorporated businesses (sole traders and partnerships) cannot claim it, though they can use the Annual Investment Allowance (AIA) up to £1 million. The asset must be new (not second-hand), used for the trade, and not a car. If the asset is sold, a balancing charge (taxable income) arises equal to the proceeds, which partially claws back the relief. Full expensing significantly improves cash flow for capital-intensive businesses by accelerating tax relief to the year of purchase rather than spreading it over several years via writing down allowances.