Capital Allowances: Full Expensing Available to Limited Companies

From 1 April 2023, the previously introduced Super Deduction capital allowances at 130% are being withdrawn. In an effort to continue encouraging capital investment, the following will come into force from April 2023:

Full Expensing 

This allows a 100% first-year relief for the purchase of qualifying assets purchased from 1 April 2023 until 31 March 2026. Qualifying assets will remain similar to the super deduction in that they must be brand new, unused, purchased within the above time frame, and incurred on the main rate plant and machinery. There will be no cap on the level of qualifying expenditure as there is for AIA. It does not apply to cars, or assets bought that are to be leased to someone else.

50% First Year Allowance 

50% allowance for new special rate assets, not qualifying for the above, which will apply until 31 March 2026. The balance of expenditure will be eligible for Writing Down Allowances.

Annual Investment Allowance

The Annual Investment Allowance(AIA) remains in place for up to £1m. As expected, any disposal of assets receiving relief under the Full Expensing or first year allowance will result in 100% and 50% of the proceeds respectively, being taxable by way of a balancing charge.

This is largely going to benefit those who purchase assets in excess of the £1 million Annual Investment Allowance annually, either as a standalone company or as a group that shares this AIA limit. Therefore, if this is relevant to your company or group, it’s worthwhile undertaking a forecasting exercise to maximize the relief available to you whilst it’s in force (although the government has indicated this may become permanent).

If you would like to find out how we can help please contact Martin Adams at, Gina Gardner at, or call 01905 794 504.

Disclaimer. This article has been prepared for information purposes only. Formal professional advice is strongly recommended before making decisions on the topics discussed in this release. No responsibility for any loss to any person acting, or not acting, as a result of this release can be accepted by us, or any person affiliated with us.

For more information about our services and how we can help your business please get in touch.
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