13th December 2023

This information is issued as of 23 November 2023. Please always check the HMRC website to ensure this information is still up-to-date.

From 1 April 2023 companies can claim 100% capital allowances on qualifying plant and machinery investments. More details can be found below and on the HMRC website.

Full Expensing (FE)
• This replaces the super-deduction which ends on 31 March 2023, and comes into effect from 1 April 2023. It is only eligible to companies and allows taxpayers to claim 100% of the cost of qualifying main pool expenditure from their profits.
• It allows companies to deduct the 100% cost against profits in the tax return for the financial period expenditure.
• It is claimable in respect of expenditure qualifying as main pool only.
• If a company is paying the new tax rate of 25% this will result in a saving of 25p for every £1 spent (or 19p for every £1 spent for companies with profits under £50,000).

The 50% first-year allowance (FYA)
• It is only eligible to companies in respect of qualifying expenditures classed as special rate assets. Taxpayers can deduct 50% of the cost from their profits before tax in the year of purchase.
• After the 50% deduction in the first year, the remaining 50% balance will then be written down as writing down allowances at the current annual rate of 6%.

Annual Investment Allowance (AIA)
• The Annual Investment Allowance (AIA) remains, providing 100% first year relief for plant and machinery investments up to £1 million. This is available for all businesses including unincorporated businesses and most partnerships.

PEAC Solutions does not give tax or accounting advice. You should seek your own independent professional advice before entering into a transaction or applying any particular accounting treatment to your business or assets.