Full Expensing: 100% Capital Allowances Made Permanent
Full expensing is the most generous capital allowances policy in UK history. Announced as permanent in the 2023 Autumn Statement, it lets companies deduct 100% of qualifying expenditure on main rate plant and machinery in the year of purchase.
What Is Full Expensing?
Full expensing allows your company to deduct the entire cost of qualifying plant and machinery from its taxable profits, immediately, in the year you buy the asset.
Before full expensing, companies could only claim 18% per year through writing down allowances (unless the AIA covered the cost).
Full Expensing vs AIA
| Feature | Full Expensing | AIA |
|---|---|---|
| Rate | 100% | 100% |
| Annual limit | None | £1,000,000 |
| Asset type | Main rate plant & machinery | All plant & machinery |
| Available to | Companies only | All businesses |
| Leased assets | No | Yes |
Key difference: Full expensing has no annual limit, while AIA is capped at £1 million. For most small companies, AIA is sufficient. Full expensing matters for larger investments.
What Qualifies for Full Expensing?
Included (Main Rate — 100%)
- Computers, laptops, tablets
- Office furniture and equipment
- Vehicles (not cars — see below)
- Manufacturing machinery
- Tools and instruments
- Servers and networking equipment
- Electric vehicle charging points
Special Rate Pool — 50% First-Year Allowance
Assets that would normally go into the special rate pool get a 50% first-year allowance instead:
- Integral features of buildings (electrical, heating, cooling, lifts)
- Long-life assets (expected life 25+ years)
- Thermal insulation of buildings
- Solar panels (special-rate expenditure under CAA 2001 s.104A)
NOT Eligible
- Cars — separate rules apply (CO2-based)
- Buildings and structures — use Structures & Buildings Allowance (3%)
- Land
- Leased assets — must be purchased outright
- Second-hand assets — must be new and unused
How to Claim on Your CT600
Capital allowances are claimed through your CT600 tax return:
- Calculate your qualifying expenditure for the period
- Apply the appropriate allowance rate
- Deduct from your trading profit (reduces box 155)
- Enter the capital allowances in the computation
CT600 Boxes
| Box | Description |
|---|---|
| 688 | Full expensing – capital allowances (main rate, 100%) |
| 689 | Full expensing – balancing charges (main rate) |
| 693 | Machinery and plant special rate allowance – allowances (50% first-year allowance) |
| 694 | Machinery and plant special rate allowance – charges |
| 690 | Annual investment allowance |
| 155 | Trading profits (capital allowances are deducted in computing this figure) |
Your filing software handles the mechanics — you just need to enter what you bought and when.
Worked Example
ABC Engineering Ltd bought £2 million of manufacturing equipment in September 2025.
| Without Full Expensing | With Full Expensing |
|---|---|
| Year 1 WDA: £360,000 (18%) | Year 1: £2,000,000 (100%) |
| Year 2 WDA: £295,200 | Year 2: £0 |
| Tax saving Year 1: £90,000 | Tax saving Year 1: £500,000 |
Full expensing provides an immediate £500,000 tax deduction instead of spreading it over many years.
Interaction With AIA
You can claim EITHER full expensing OR AIA on a qualifying asset — not both. In practice:
- Sole traders and partnerships: Can only use AIA (full expensing is companies only)
- Companies spending under £1M: AIA may be simpler (covers all plant & machinery including special rate)
- Companies spending over £1M: Use full expensing for the excess above AIA
Is Full Expensing Really Permanent?
Yes. The government made full expensing permanent in the Autumn Statement 2023. Unlike previous temporary super-deductions (130% first-year allowance 2021-2023), full expensing has no end date.
This gives companies certainty for long-term investment planning.
Disposal Events
If you later sell or dispose of an asset on which you claimed full expensing, a balancing charge arises immediately — there is no grace period or minimum holding time.
- Main-rate full expensing (100%): the balancing charge equals 100% of the disposal proceeds.
- Special-rate 50% FYA: the balancing charge equals 50% of the disposal proceeds.
The charge is added back to your taxable profits in the period of disposal. For high-value assets, this can create a significant tax liability in the year of sale, so factor this in when planning disposals.
Key Takeaways
- 100% deduction on qualifying main rate plant and machinery
- No annual limit — unlike AIA's £1 million cap
- Companies only — not available to sole traders
- New assets only — must be purchased, not leased
- Permanent — no end date
- Claim on your CT600 — enter in box 688 (main rate) or box 693 (50% special rate); capital allowances reduce box 155 trading profit
Claim Your Capital Allowances
Taxpipe's CT600 wizard includes a capital allowances section where you enter your purchases. The software calculates your AIA and full expensing claims automatically.
File your CT600 → — £59, capital allowances calculated for you.