Readers’ forum: Capital allowance choice

19 June 2023

Issue: 4893 / Categories: Forum & Feedback , Capital allowances

Corporate client

I’ve been looking at the new full expensing rules for one of my larger corporate clients. They are planning to spend £500 000 later this year on new item of plant. This will qualify for 100% first-year allowance (FYA) under full expensing and also the 100% annual investment allowance. So the relief will be the same under either route. But as I understand it when the plant is sold there is a difference.

Under full expensing the disposal value would be brought directly into charge whereas under the annual investment allowance (AIA) the disposal will be deducted from the general pool and so might (depending on the values) not trigger a balancing charge. Is that correct? If so is there ever any reason to claim the FYA under full expensing or if both reliefs apply should the AIA always be claimed in preference?

If that...

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