What is the Full Expensing Scheme?

Full Expensing Scheme (FES) is a capital allowance tax relief scheme that essentially enables UK companies to invest in high value new assets for their business, and while doing so benefit from reducing their corporation tax liability in the same year of purchase.

So whether you are investing in plant equipment, machinery, lorries. technology or a number of other assets you could save thousands of pounds. As you can essentially achieve a tax saving of 25p for every £1 spent.

In order to be viable for the scheme there are some rules relating to how the asset or assets have been purchased, as long as they are funded through outright purchase, a hire purchase, or a hire purchase with a balloon then they can claim the value back through FES.

A real life example:

If a company purchased a new asset of the value of £100,000 and they were due to earn £500,000 profit, ordinarily they would be required to pay 25% corporation tax equaling £125,000. However, under the full expensing scheme the tax payment would be reduced, as they can deduct 100% of the cost of the asset from their profits, meaning their profits would now show as £400,000 instead of £500,000, reducing the corporation tax owed from £125,000 to £100,000.

To understand more about the Full Expensing Scheme or if you have any questions then please contact our knowledgeable team Enquire Now | Full Circle Asset Finance