Using Full Expensing

Full Expensing (FE) allows companies to claim 100% capital allowances on qualifying plant and machinery expenditure that would usually qualify for capital allowances at at 18% per annum (14% from 1 April 2026).

Additionally, there is a first-year allowance (FYA) of 50% for assets that would usually qualify for the special rate capital allowances of 6% per annum.

• The tax incentive enables companies that are within the charge to corporation tax to deduct the full cost of new and unused plant and machinery from their taxable profits in the year of purchase rather than over the lifetime of the assets.
• Corporate partners in partnerships are also eligible to claim FE.
• You can claim FE on most plant and machinery assets purchased outright. It’s also available for assets funded through hire purchase and certain types of leased assets. The relief may not be available where there is any form of sale and leaseback or sale and hire purchase back.
• Further details are included in the attached factsheet.
• Qualifying plant and machinery includes, but is not limited to, warehousing equipment, manufacturing equipment, construction equipment, commercial vehicles (not cars) and computer and office equipment.
• Eligible assets for 50% FYA include, but are not limited to, solar shading, electrical and lighting systems.
• Items must be bought and owned (or treated as owned), not gifted to you, and if you end up selling an item that benefited from FE or the 50% FYA, then you may have to pay tax subsequently. 
  
  
• A new 40% first year allowance is being introduced for eligible main-rate plant and machinery expenditure incurred from 1 January 2026. This could be of benefit where FE is not available (eg. for individuals and partnerships) and other reliefs, such as the Annual Investment Allowance, have been fully utilised.

At Lombard, we are here to support you at every stage of your journey. Our specialism is asset finance, which we’ve been doing it for over 150 years. We provide asset finance for firms of all sizes, from small family concerns to large commercial enterprises and across sectors, from manufacturing to renewable energy, technology, agriculture and vehicles and fleets