Companies can claim 100% first-year relief on qualifying investments

10th November 2025

In the UK, 100% first-year relief on qualifying investment allows businesses to deduct the full cost of eligible assets from their profits before tax in the year of purchase, accelerating tax relief and reducing their corporation tax liability.

This is available through two main mechanisms: Full Expensing (for companies) and the Annual Investment Allowance (AIA) (for all businesses).

Full Expensing (for Companies)
Companies subject to Corporation Tax can claim 100% full expensing on qualifying new plant and machinery.

Qualifying Investments: New and unused "main rate" plant and machinery, such as computers, office equipment, vehicles (excluding cars), and certain building fixtures.

Conditions:
Expenditure must be incurred on or after 1 April 2023.
The asset must be new and unused, not second-hand.
The asset must not be bought to lease to someone else (with some exceptions).
Cars are specifically excluded.
Annual Investment Allowance (AIA) (for all Businesses)

The AIA provides 100% first-year relief for most businesses (including unincorporated businesses and partnerships) on a wide range of plant and machinery investments up to a limit.
Limit: The maximum amount that can be claimed is £1 million per year.
Qualifying Investments: Most new and second-hand plant and machinery, including machines, tools, vans, lorries, office equipment, and some fixtures.

Conditions:
The allowance applies to both new and second-hand assets.
Cars are generally excluded from AIA claims.
Other Specific 100% First-Year Allowances
There are also specific 100% first-year allowances for certain green and environmentally friendly investments:
New electric cars and new cars with zero CO2 emissions.
New zero-emission goods vehicles.
Equipment for electric vehicle charging points.
Certain new vehicle gas refuelling equipment (for gas, biogas, and hydrogen).

Key Points
Accelerated Relief: The 100% relief allows the entire cost to be written off against taxable profits immediately, rather than over several years using writing down allowances (WDA).

Cannot Double Claim: You cannot claim both AIA and another first-year allowance (like full expensing) for the same expenditure.

Tax Saving: For every pound invested, a company can cut its taxes by up to 25p (depending on its corporation tax rate).