Any company whose annual expenditure on plant and machinery is less than £1 million will already be able to fully expense this outlay using the annual investment allowance, which also fully expenses special rate expenditure. For larger companies, the temporary nature of the new relief – for three years from 1 April 2023 until 31 March 2026 – is not conducive to longer-term planning.
Along with full expensing (a 100% first-year allowance) for main rate expenditure, the 50% first-year allowance for special rate expenditure will continue to be available until 31 March 2026. Neither allowance covers expenditure on second-hand assets, although the annual investment allowance helps there. The enhanced allowances are not available for unincorporated businesses.
