Full Expensing of Assets

Full Expensing of Assets – What Is It? Full expensing is an accounting method that allows companies to deduct the full cost of qualifying assets from their taxable income in the year they are purchased, rather than depreciating them over several years. This means that instead of spreading the cost of an asset over its […]

April 19th, 2024

Full Expensing of Assets – What Is It?

Full expensing is an accounting method that allows companies to deduct the full cost of qualifying assets from their taxable income in the year they are purchased, rather than depreciating them over several years. This means that instead of spreading the cost of an asset over its useful life for tax purposes, the entire cost is deducted upfront which helps reduce corporation tax and provides a bonus to companies that reinvest in assets.

The Government theory is that by allowing companies to deduct the full cost of assets upfront, it reduces the after-tax cost of investment and encourages businesses to invest in new equipment, machinery, and other assets, thereby stimulating economic growth and productivity.

In the last budget this scheme was renewed until April 2026.

The Unknown Bit

It is far to say that most manufacturing companies or business with large asset purchases are aware of this scheme, however many companies that aren’t asset heavy are unaware.

Asset doesn’t just mean heavy equipment, it equally applies to:

machines such as computers or printers
office equipment such as desks and chairs
vehicles such as vans, lorries and tractors (but not cars)
equipment such as shelving and tools such as ladders and drills
some fixtures such as kitchen and bathroom fittings and fire alarm systems in non-residential property

It means that this scheme applies to almost every incorporated business including those that typically don’t think they invest in assets. Full details of the scheme can be read here.

Financing Purchases

This scheme applies to purchasing assets, not hiring. This means that you will need to have ownership of what you are buying, so if you are financing the purchase make sure it is done correctly. For the vast majority of companies who are buying general assets then financing the purchase, paying over a period of time and claiming the full cost in year one offers a real bonus.

Speak to your accountant if you are buying any asset, claim the cost to reduce your corporation tax and if you want help financing the purchase then get in touch.

By Dave Farmer

David Farmer

Over 30 years finance experience. Former credit underwriter, founder of Lime Finance Solutions in 2012. Multi Award winning business, featured in Sunday Telegraph, Parliamentary Review, Sky TV and others. Regular contributor to press and business associations. FCA Authorised, ALIBF Qualified. Specialist in Commercial Mortgages, Business Lending, Property and Development Finance.