Short answer
Full expensing gives companies a 100% first year deduction on new and unused main rate plant and machinery, with no cap, plus a 50% first year allowance on new special rate assets. It applies to companies only, not sole traders.
Corporation tax
What is full expensing and can I use it?
Full expensing gives companies 100% first year relief on new main rate plant and machinery, with 50% on special rate assets.
Written and reviewed by Waqas Sagar Member of ICAEW, Fellow of ACCA, Fellow of AAT, a double graduate and entrepreneur at heart, helping startups grow and serving thousands of businesses nationwide with an excellent team. Published by LimitedCompany.Accountants, 12 London Road, Morden, London SM4 5BQ. Reviewed 12 September 2026 against 2026/27 UK rates and current Companies House and HMRC guidance.
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Full expensing gives companies a 100% first year deduction on new and unused main rate plant and machinery, with no cap, plus a 50% first year allowance on new special rate assets. It applies to companies only, not sole traders.
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Full expensing or annual investment allowance?
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The disposal trap
Full expensing or annual investment allowance?
For most small companies the annual investment allowance is simpler and covers the same ground up to £1m, including second-hand assets, which full expensing excludes. Full expensing matters where spending exceeds £1m or the allowance is shared across a group.
Both exclude cars. Full expensing also excludes assets bought for leasing in most cases, and anything second-hand or previously used.
The disposal trap
When a full expensing asset is sold, an immediate balancing charge arises on the disposal value rather than the usual pool adjustment, and for the 50% allowance the charge is calculated on half the proceeds. The relief is real but it is not permanent if the asset leaves the business.
Keep a clear register of which assets were relieved under which route, or the disposal calculation becomes guesswork several years later.
Before you act
Rates, thresholds and deadlines quoted here reflect the 2026/27 UK position and current Companies House and HMRC guidance. Check GOV.UK, or ask us, before relying on them for your own company.
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Frequently asked
What is full expensing and can I use it?: questions directors ask
Can a sole trader use full expensing?
No. It is a corporation tax measure. Unincorporated businesses use the annual investment allowance.
Does used equipment qualify?
No, it must be new and unused. Second-hand equipment goes through the annual investment allowance.
Is there a cap?
No monetary cap, unlike the £1m annual investment allowance.
What records are needed for what is full expensing and can i use it?
Keep bank statements, sales and platform reports, purchase invoices, payroll records, VAT workings, finance agreements and Companies House correspondence. We confirm the exact list at onboarding and identify gaps before a filing deadline becomes urgent.
How much does help with what is full expensing and can i use it cost?
The fee depends on transaction volume, record quality, VAT and payroll requirements, historic catch-up and the level of reporting needed. We agree a fixed scope and price before technical work starts, with published packages available on our fees page.
Can you take over what is full expensing and can i use it from another accountant?
Yes. We request professional clearance, collect the prior records and authorities, check the next Companies House and HMRC deadlines, and give you one clear handover list. The process is normally completed remotely.
Can what is full expensing and can i use it be handled online?
Yes. We work through secure cloud records, scheduled reviews and digital approvals, while keeping a named team available by phone, video call and email. Clients can also visit our Morden office by appointment.
Which accounting software works best for what is full expensing and can i use it?
We regularly work with Xero, QuickBooks, FreeAgent, Sage and connected sales or expense apps. The right setup depends on transaction volume, integrations and the reports you need, not simply the software brand.
What tax deadlines matter for what is full expensing and can i use it?
The relevant calendar may include annual accounts, Corporation Tax payment and return dates, confirmation statements, VAT returns, payroll submissions and Self Assessment. We map the dates from your company year end and registrations.
Is this what is full expensing and can i use it guidance personal tax advice?
No. This page explains general UK rules and common accounting treatment. Your facts, contracts and wider tax position must be reviewed before you rely on a conclusion.
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Check the current rules
Use official information as your reference point.
Deadlines, thresholds and filing rules change. GOV.UK and Companies House publish the current statutory position; advice should then be applied to your company’s circumstances.