What Is Full Expensing?
Full expensing is a UK tax relief that allows companies to deduct 100% of the cost of new qualifying plant and machinery from their taxable profits in the year of purchase. It was introduced in April 2023 and made permanent in the Autumn 2024 Budget.
Industrial robots, cobots, AGVs, AMRs, automated production systems and related integration costs all qualify as plant and machinery - meaning the full cost of a robotics investment can generate significant corporation tax relief in year 1.
Which Finance Structures Qualify for Full Expensing?
Hire Purchase (HP)
The business is treated as the legal owner from day one. Full expensing can be claimed on the full asset value in year 1, even though payments are spread over 2–7 years. This is the optimal structure for tax efficiency.
Finance Lease
The lender retains legal ownership. The business can only deduct the lease payments as they arise - not the full asset value in year 1. Full expensing cannot be claimed on a finance lease.
Operating Lease
Similar to finance lease - lease payments are deducted as incurred. Full expensing cannot be claimed. Operating lease may still suit businesses who prioritise flexibility over tax efficiency.
Outright Purchase
Full expensing can be claimed immediately. The disadvantage is the impact on cash flow - HP finance achieves the same tax result while spreading the cost.
Worked Example: £150,000 Robotic Welding Cell on HP
| Tax & Finance Analysis | |
|---|---|
| Asset | Robotic welding cell (new) |
| Total asset cost | £150,000 |
| Finance structure | Hire purchase, 5 years at 7.0% APR |
| Deposit | £0 |
| Monthly payment | £2,970 |
| Full expensing claim (100%) | £150,000 deducted from taxable profit in year 1 |
| Corp tax saved (25%) | £37,500 in year 1 |
| Net cost in year 1 | £35,640 payments minus £37,500 tax saving = net positive |
| Total interest cost | £28,200 |
Indicative example only. Tax calculations are illustrative - consult your accountant for advice specific to your situation. Finance subject to credit approval.
How to Structure Your Robot Finance for Maximum Tax Efficiency
- 1Choose hire purchase, not finance lease - HP gives you the full expensing benefit; lease does not
- 2Ensure the asset is new - full expensing only applies to new plant and machinery
- 3Include integration costs in the HP agreement where possible - capital costs of installation may also qualify
- 4Time the purchase to your accounting year end - full expensing is claimed in the year the asset is brought into use
- 5Coordinate with your accountant before signing - they will confirm the correct tax treatment and timing