Full expensing: 100% tax relief on new plant and machinery

From 1 April 2023, limited companies can claim full expensing: a 100% first-year allowance that deducts the full cost of qualifying new main-rate plant and machinery from taxable profits in the year of purchase. Assets that fall into the special-rate pool get a 50% first-year allowance instead, with the balance relieved through writing-down allowances in later years. (Figures verified today against GOV.UK's capital allowances guidance.)

The key points to know:

• Company-only relief: only companies can claim full expensing and the 50% first-year allowance; sole traders and partnerships cannot.
• - New and unused assets: qualifying plant and machinery must be new and unused, and cars are excluded.
• - Made permanent: the relief applies from 1 April 2023 with no end date published on GOV.UK, so it is now a permanent part of the capital allowances regime.
• - You cannot claim both full expensing and the 50% first-year allowance against the same expenditure, so choose one where both could apply.

For small businesses, this makes investing in equipment far more tax-efficient in year one. Talk to your accountant about timing purchases within your accounting period to make the most of it.