Budget 2023 – Full expensing explained

April 20, 2023

Budget 2023: Full expensing is a boost for tax reliefs on investment in plant and machinery

“The government has announced increased investment support for UK businesses. Full expensing means businesses can write off 100% of the cost of an investment in one go.

 “Find out how Full Expensing can work for your business by talking to one of our experts at Sheppex. We specialise in helping UK businesses with asset management.”

Businesses will now benefit from the following:

  • The offer of 100% first-year relief to companies on qualifying new main rate plant and machinery investments from 1 April 2023 until 31 March 2026.
  • 50% first-year allowance (FYA) for expenditure by companies on new special rate (including long life) assets until 31 March 2026.
  • The Annual Investment Allowance (AIA) provides 100% first-year relief for plant and machinery investments up to £1 million, available for all businesses, including unincorporated businesses and most partnerships.

‘Business investment has been a long-standing weakness in the UK,’ said the government when it announced the new measures in the Spring Budget 2023. UK business investment accounted for 10.0% of GDP compared to the OECD average of 12.5% in 2021! To change the dynamics of the UK business investment market, the government has introduced a new Capital Allowances offer of ‘full expensing’.

What’s included in ‘plant and machinery’?

As a guide, the government says these types of plant and machinery may qualify for full expensing.

(If you are unsure about your circumstances and what will or will not qualify for full expensing, please contact Sheppex, and we can chat over the options).

  • Construction equipment – eg excavators, compactors, and bulldozers
  • Warehousing equipment – eg forklift trucks, pallet trucks, shelving and stackers
  • Vehicles – eg vans, lorries and tractors (but not cars)
  • Machines – eg plant & machinery, printers, lathes and computers

Plant and machinery must be new and unused.