Annual Investment Allowance.
AIA lets you deduct the full value of most qualifying plant and machinery from taxable profits, up to £1 million. Business cars do not qualify for AIA.
Short accounting periods can reduce the maximum allowance. Check the purchase date and the accounting period before you claim.
Full expensing and first-year allowances.
Companies can claim full expensing on qualifying plant and machinery bought for use in the business, subject to the rules. A 40% first-year allowance applies to qualifying main-rate plant and machinery purchased after 1 January 2026.
These allowances have different conditions. Do not treat every equipment purchase as a full-expensing claim.
What does not qualify.
Business cars, assets bought before the business started using them, gifted assets and items used outside the business may need a different treatment. Buildings, land and structures follow separate rules.
Records to keep.
Keep the invoice, contract, payment date, asset description, business-use details and evidence of when the asset came into use. Record disposals because a later sale can create a balancing adjustment or tax charge.
Official sources.
Check the current guidance before you rely on a rate, threshold, deadline or relief.
Planning an equipment purchase?
We can review the proposed asset, ownership structure and likely tax treatment before you commit.
Discuss capital expenditure