Full Expensing Capital Allowance Calculator
Calculate corporation tax savings from 100% Full Expensing on qualifying plant and machinery. Compare with Annual Investment Allowance and Writing Down Allowances.
Last updated: March 2026
Full Expensing Calculator 2026
Calculate your Year 1 CT saving, cash flow benefit, and NPV vs Writing Down Allowances
Cash Flow Timing Benefit vs Writing Down Allowances
NPV Analysis
Full Expensing vs Other Capital Allowances — Summary
| Allowance | Rate | Who Can Claim | New / Second-Hand? | Cap |
|---|---|---|---|---|
| Full Expensing (Main Pool) | 100% FYA | Companies only | New only | None |
| Full Expensing (Special Rate) | 50% FYA | Companies only | New only | None |
| Annual Investment Allowance (AIA) | 100% | All businesses | New & second-hand | £1m/year |
| Main Pool WDA | 18%/year | All businesses | New & second-hand | None |
| Special Rate Pool WDA | 6%/year | All businesses | New & second-hand | None |
| New Electric Cars (FYA) | 100% | All businesses | New only | None |
7 Key Facts About Full Expensing Every Finance Director Should Know
1. Full Expensing — What It Is and Why It Matters
Full Expensing (also written as "full expensing" or "100% first-year allowance") was introduced in the Spring Budget 2023 and made permanent by Chancellor Jeremy Hunt in the Autumn Statement 2023. It allows UK incorporated companies to deduct 100% of the cost of new qualifying main pool plant and machinery from taxable profits in the year of purchase — the equivalent of expensing capital items immediately rather than depreciating them over years. The cash flow benefit is significant: a company spending £1 million on qualifying equipment at a 25% CT rate receives a £250,000 tax saving in Year 1, versus waiting years to receive the same total relief under 18% Writing Down Allowances. Full Expensing replaced the super-deduction (130% FYA) that applied from April 2021 to March 2023.
2. Main Pool vs Special Rate Pool — Different FYA Rates
Full Expensing has two rates depending on the asset category: Main rate pool — 100% FYA: This covers most plant and machinery including computers, servers, manufacturing equipment, office machinery, most commercial vehicles (vans, lorries — but not cars), office furniture not integral to the building, and production line equipment. Special rate pool — 50% FYA: This covers integral features (electrical systems, cold water systems, space heating, lifts, escalators, air conditioning, automatic lighting systems), long-life assets (expected useful life of 25+ years), and thermal insulation and solar panels installed in commercial buildings. The remaining 50% of special rate pool expenditure stays in the pool and is written down at 6% per year. This 50% FYA is considerably better than waiting for the 6% WDA, but not as generous as the 100% main pool rate.
3. What Does NOT Qualify for Full Expensing
Not all capital expenditure qualifies. Key exclusions: Cars are excluded regardless of price — they have their own capital allowance rules (100% FYA for zero-emission cars, 18% WDA for cars with CO2 ≤50g/km, 6% WDA for higher emission cars). Second-hand assets — Full Expensing is only for new plant and machinery. A used van purchased from a dealer does not qualify; a brand-new van does. Assets acquired for leasing to third parties — if your company buys plant and immediately leases it out commercially, Full Expensing does not apply (with some exceptions for background plant leasing). Land, buildings, and structures — these are not plant and machinery (see Structures and Buildings Allowance for qualifying construction expenditure). Stock-in-trade and inventory — not plant.
4. Full Expensing and Disposal — Balancing Charges
A critical feature of Full Expensing is that when a qualifying asset is sold or disposed of, a balancing charge arises. For main pool 100% FYA assets: when sold, the lower of the proceeds and the original cost is brought back into taxable profits as a balancing charge. Example: asset cost £200,000 (100% FYA claimed), sold for £80,000 after 3 years — £80,000 balancing charge adds to profits, generating £20,000 extra CT (at 25%). Over the full ownership period, the net tax benefit equals the time value of money from accelerated relief (getting the £50,000 tax saving in Year 1 versus receiving it spread over many years). For assets that are scrapped rather than sold, there is no balancing charge on main pool assets — those remaining in the pool at the end of the accounting period are subject to the normal 18% WDA.
5. Full Expensing vs Annual Investment Allowance — Which to Use?
For expenditure under £1 million per year, the Annual Investment Allowance (AIA) and Full Expensing often provide identical tax relief (100% deduction in Year 1) on qualifying new assets. However, there are key differences: AIA covers both new and second-hand assets; Full Expensing is new only. AIA is available to sole traders and partnerships; Full Expensing is companies only. AIA covers both main and special rate pool assets at 100%; Full Expensing gives 100% on main pool but only 50% on special rate pool. The key strategic advantage of Full Expensing is for companies spending over £1 million on qualifying new assets — there is no cap, so £5m or £50m of new plant can all be fully expensed. For capital-intensive manufacturers, this is transformative.
6. Interaction with R&D Capital Expenditure
Companies undertaking R&D can potentially benefit from both Full Expensing and the R&D Expenditure Credit (RDEC) on the same capital assets — but care is needed. Revenue R&D expenditure (staff, consumables, software) is claimed under the merged R&D scheme (RDEC at 20% above-the-line credit from April 2024). Capital R&D expenditure on equipment used exclusively for R&D can also be fully expensed. However, the same expenditure cannot be claimed both as an RDEC qualifying cost and as a Full Expensing allowance — HMRC requires correct splitting. If equipment is partly used for R&D and partly general trade, an apportionment is made. HMRC's R&D detailed guidance (CIRD manuals) covers the interaction. Always document the R&D use of capital equipment at the time of purchase.
7. Record Keeping and HMRC Guidance on Timing
To claim Full Expensing, expenditure must be incurred in the accounting period for which the claim is made. HMRC's Capital Allowances Manual (CA) and guidance note that: the asset must be owned at the end of the accounting period (or have been owned and disposed of within it). Capital allowances are claimed on the CT600 corporation tax return. Records required include: purchase invoices (showing date, description, and cost), delivery notes confirming receipt, asset register entries. The HMRC position on timing of incurring expenditure: for capital assets under a building contract, expenditure is incurred when the obligation to pay becomes unconditional (typically when the work is certified or completed, not when the invoice is paid). For off-the-shelf assets, it is the date of purchase/delivery. Group companies should consider pooling allowances via group relief if any entity has insufficient profits to absorb the full deduction in Year 1.
Worked Examples: Full Expensing 2026
Example 1: Manufacturing Company — £2m New Equipment (Main Pool)
- Capital expenditure: £2,000,000 new CNC machinery
- Pool: Main pool — 100% FYA
- CT rate: 25%
- Year 1 allowance: £2,000,000 × 100% = £2,000,000
- Year 1 CT saving: £2,000,000 × 25% = £500,000
- WDA alternative (18% p.a.): Year 1 = £360,000; CT saving = £90,000
- Full Expensing Year 1 advantage: £410,000 additional tax saving in Year 1
Example 2: Office Fit-Out — £300k Integral Features (Special Rate Pool)
- Capital expenditure: £300,000 (new electrical system, air conditioning, lift)
- Pool: Special rate pool — 50% FYA
- CT rate: 25%
- Year 1 FYA: £300,000 × 50% = £150,000
- Year 1 CT saving: £150,000 × 25% = £37,500
- Remaining in pool (Year 2+): £300,000 × 50% = £150,000 at 6% WDA
- WDA alternative (6% p.a.): Year 1 = £18,000; CT saving = £4,500
- Year 1 advantage from 50% FYA: £33,000 additional CT saving in Year 1
Sources & Methodology
- HMRC – Full Expensing Guidance
- HMRC – Capital Allowances Overview
- HMRC – Annual Investment Allowance
Disclaimer: This calculator provides estimates only. NPV calculations use simplified assumptions. Capital allowances planning can be complex — consult a qualified accountant before making significant capital expenditure decisions.