Plant and Machinery investment – everything you need to know!

Plant and Machinery investment under full expensing

Plant and Machinery why invest?

Investing in Plant and Machinery allows your company to have the most up to date technologies. But it also helps increase expenditure nationwide. Therefore, it makes sense as to why the government are keen to encourage companies to spend money in this area!

For most, 2021 is a blur! However, if you cast your memory back you may remember the government’s incentive was through a Super Deduction. This Super Deduction was a new capital allowance that allowed companies to claim 130% on assets that qualified. This capital allowance ended on 31 March 2023 and was subsequently replaced with Full Expensing.

What is Full Expensing?

From 1 April 2023 until 31 March 2026, Full Expensing will replace the Super Deduction. Full Expensing allows companies to write off the full cost of qualifying main rate Plant and Machinery in the year of investment. Full Expensing will be a first year allowance at 100% for main rate assets.

Companies that invest in special rate (including long life) assets will also benefit but the first year allowance will only be at 50%.

This new relief under Full Expensing will only apply to new equipment and will exclude leasing.

Full Expensing will also only be available to companies and not individuals or partnerships (sigh!)

What about Research and Development relief (R&D)?

This is still an area that the government needs to improve on however, they have decided to improve it slightly from their original plans.

There is a special relief now available of £27 for every £100 of R & D investment for loss-making small and medium sized businesses engaged in intensive R & D sectors.

Casting your memory back to the Autumn budget, you may remember that some relief was removed and this incentive is looking to replace some of that.

To add to the confusion in relation to R & D, this now means we have three R & D schemes instead of the previous two!

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