Full Expensing
Full Expensing lets you claim back 100% of the cost of qualifying plant and machinery all in one go.
The Government has introduced a tax relief measure called ‘Full Expensing’, which allows companies to claim an unlimited 100% first-year allowance on qualifying investments made in new plant and machinery.
We believe that all UK businesses have unique needs when it comes to accessing finance.
How does Full Expensing work?
‘Full Expensing’ enables companies to deduct the entire amount of their investment in new assets, such as machinery and equipment, from their taxable profits immediately, rather than spreading out the deduction over several years.
Essentially, for every pound a company invests, they can get up to 25p in tax cuts. This immediate deduction will reduce your company’s tax liability in the near term, potentially, increasing the amount of capital available for re-investment back into your business.
Additionally, for plant and machinery that falls under the ‘special rate’ category, a 50% first-year allowance will be applicable during the same period.
For example:
A business spends £50,000 on new equipment and £40,000 on a delivery van. They would deduct £90,000 from their company profits and pay Corporation Tax on the remainder. At a 25% Corporation Tax rate, the company now pays £22,500 less tax, a saving equivalent to 25% of the original purchase price.
What sort of finance can I use?
If you are looking to make the most of the ‘Full Expensing’ scheme, any equipment purchased using a Business Loan or a Hire Purchase (HP) agreement would qualify.
What sort of equipment is eligible?
- Plant & Machinery such as cranes & diggers
- Farming Machinery and Farming Equipment.
- IT Equipment
- Commercial vehicles such as tractors, lorries and vans (not cars)
- Forklift trucks
- Construction equipment
- Fire alarm equipment
- Kitchen & Bathroom fit-outs in non-residential properties
What qualifies for ‘50% First-Year Allowance’
- Electrical and lighting systems
- Hot and cold-water systems
- Air-conditioning systems
- Lifts
- Solar Shading
Only limited companies are eligible for full expensing however, unincorporated businesses investing in plant and machinery can still take advantage of the Annual Investment Allowance. This provides a 100% deduction on qualifying expenditure up to £1 million.
Other products you may be interested in
We offer a range of business financing solutions to meet the needs of various industries. Backed with decades of banking and finance experience, our team works with thousands of companies throughout the UK. We help them optimise cashflow and achieve their goals through a range of business finance solutions, including:
Are you a Supplier looking for finance for your customers?
If you sell any form of equipment, machinery or commercial vehicles, why not offer point of sale finance to your customers? You can make supplier finance arrangements through any one of our group businesses, where local knowledge is backed by national support.