What is Full Expensing? UK Definition 2026/27
Quick Answer
100% first-year tax relief for companies on qualifying plant and machinery.
Definition of Full Expensing
Full Expensing allows companies to deduct 100% of qualifying main rate plant and machinery expenditure from taxable profits in the year of purchase. Introduced permanently from April 2023, it replaces the super-deduction. Only companies can claim - sole traders and partnerships use AIA instead. Special rate assets get 50% first-year allowance.
Full Expensing — Key Facts for 2026/27
| Relief rate | 100% |
| Who can claim | Companies only |
| Qualifying assets | Main rate pool P&M |
| Special rate assets | 50% FYA |
How Full Expensing Works — Example
- 1Company buys machinery: £500,000
- 2Full Expensing relief: 100%
- 3Tax deduction: £500,000
- 4Corporation Tax saving (25%): £125,000
- 5Effective cost: £375,000
How Full Expensing Affects Your Tax
Full Expensing makes the UK one of the most generous regimes for business investment. Large capital expenditure receives immediate tax relief, significantly improving project returns and cash flow.
Official HMRC Guidance on Full Expensing
For official guidance, refer to HMRC's documentation. Tax rules can change, so always verify current rates and thresholds on gov.uk.
HMRC: Full ExpensingFrequently Asked Questions about Full Expensing
Related Tax Terms
Capital Allowances
Tax relief on qualifying business assets like equipment, vehicles, and machinery.
Annual Investment Allowance (AIA)
Tax relief allowing businesses to deduct 100% of qualifying equipment costs up to £1 million.
Corporation Tax
Tax paid by UK limited companies on their profits at 19% or 25%.
Accuracy Note
This information is for guidance only and is based on 2026/27 tax year rates. Tax rules are complex and your circumstances may differ. For personal advice, consult a qualified accountant or tax adviser.