Corporation Tax and Capital Allowances: Claiming Full Expensing & AIA

For UK companies, capital allowances allow businesses to deduct capital expenditure from taxable profits — reducing their Corporation Tax bill.

Plant & Machinery:
Business-use assets such as machinery, tools, computers, vehicles, and certain fixtures. These typically qualify for capital allowances like AIA and Full Expensing.

What are capital allowances?
When a company buys plant and machinery, the full cost isn’t deducted immediately. Instead, tax is relieved through allowances such as:

• Annual Investment Allowance (AIA)
• Full Expensing
• Structures & Buildings Allowance (SBA)

How it works in 2025/26
Example:
Spend £500,000 on qualifying plant & machinery in 2025/26 → claim 100% deduction → reduces taxable profits immediately.