Full Expensing Scheme

Full Expensing Scheme

Full Expensing Scheme

The Chancellor introduces the full expensing scheme, a partial replacement for the Super Deduction, allowing companies to write off 100% of the investment cost in one go.

Announced in the Spring 2023 budget, the full expensing scheme helps businesses that invest in IT equipment and machinery to claim back 100% of the cost by writing it off against tax on their profits. 

Full Expensing comes into effect in April 2023 and is in place until at least March 2026.

To further encourage investment after the pandemic, the Government introduced the super-deduction in 2021.

Although this measure is less generous than the original Super Deduction, the Full Expensing will make the UK’s Capital Allowances system among the best in the world. For every pound a company invests, they can get up to 25p in tax relief. 

The scheme is due to last only three years, with the possibility of renewal, and expects to cost the Government £10.7 billion a year by 2025.

There are different types of capital allowances available, including the Annual Investment Allowance (AIA), Writing Down Allowances (WDAs), First-Year Allowances (FYAs), and Structures and Buildings Allowances (SBAs).

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