There's been some confusion around a tax relief deadline that passed on 31 March 2026. If you were tracking it, or simply hadn't got round to making a purchase, you might assume the opportunity is gone.
It isn't.
UK businesses currently have three separate routes to claim up to 100% tax relief on the cost of a new forklift truck. All three are HMRC-approved and fully in place. Here's what each one means in practice.
What Actually Changed on 31 March 2026?
The confusion stems from how Full Expensing was originally introduced. When it launched in April 2023 — as a successor to the Super Deduction — it was framed as a temporary measure running to 31 March 2026. That deadline attracted attention.
What received less attention was the government's announcement in November 2023 that Full Expensing would be made permanent, subsequently written into Finance Act 2024. The deadline passed. The relief didn't.
There are now three distinct routes available, and which one suits you depends on how your business is structured.
Route 1: Full Expensing
For limited companies only
Full Expensing allows incorporated businesses to deduct 100% of the cost of qualifying new plant and machinery from taxable profits in the year of purchase. On a forklift, that means the full price comes off your profit before Corporation Tax is applied. At the current 25% rate, that's a saving of up to 25p for every £1 spent.
Key conditions: the equipment must be brand new, purchased outright by the company, and used within the business rather than leased to a third party. The claim must be made in the accounting period the expenditure falls in.
One thing worth noting on disposal: if you later sell a forklift on which you claimed Full Expensing, a full balancing charge applies. A £20,000 sale adds £20,000 to your taxable profits in that period. For businesses that regularly trade equipment in, the Annual Investment Allowance may actually be the more efficient route, since pooled assets are treated more favourably on disposal.
There is no cap on the amount claimable under Full Expensing, which makes it particularly relevant for businesses investing in multiple units.
| Relief | 100% in year of purchase |
| Who qualifies | Limited companies |
| New or used | New only |
| Cap | None |
| Status | Permanent |
Route 2: Annual Investment Allowance (AIA)
Open to all UK businesses
The AIA is the most broadly applicable of the three options. Unlike Full Expensing, it is available to sole traders, partnerships, and limited companies alike — any UK business subject to income tax or corporation tax.
It allows 100% of qualifying plant and machinery costs to be deducted from taxable profits, up to a limit of £1 million per year. That threshold has been set permanently at this level since Spring 2023. For most forklift buyers, whether purchasing one unit or several, the limit is more than sufficient.
The AIA also covers second-hand equipment, which gives you more flexibility when sourcing. Where Full Expensing is restricted to new assets, the AIA applies regardless of whether the equipment is new or used.
One point to be aware of: where a business is part of a group or under common control, the £1 million limit must be shared across related entities. If you operate multiple companies, it's worth taking advice on how to allocate it efficiently.
| Relief | 100% in year of purchase |
| Who qualifies | All UK businesses (sole traders, partnerships, limited companies) |
| New or used | Both |
| Cap | £1 million per year |
| Status | Permanent |
Route 3: 40% First-Year Allowance
Introduced January 2026
A new 40% First-Year Allowance came into effect from 1 January 2026 for companies and 6 April 2026 for sole traders, introduced as part of the Autumn Budget 2025.
It doesn't offer the same headline rate as the other two options, but it fills a gap that neither Full Expensing nor the AIA covers: assets purchased for leasing. If your business hires forklifts out to third parties, this is the route that applies.
Under the 40% FYA, you claim 40% of the asset's cost in the year of purchase. The remaining 60% enters your main pool, subject to writing-down allowances in subsequent years. It's worth noting that the main pool writing-down allowance rate has been reduced from 18% to 14% per year from April 2026 — part of the same Budget package — so the remaining balance will be relieved more slowly than before.
Like Full Expensing, the 40% FYA applies to new and unused assets only. For second-hand equipment, the AIA is the correct route.
| Relief | 40% in year of purchase, remainder via writing-down allowances |
| Who qualifies | All UK businesses (sole traders, partnerships, limited companies) |
| New or used | New only |
| Leasing | Yes — available on assets purchased for leasing |
| Status | Permanent |
Which Route Applies to You?
As a starting point: if you are a limited company buying a new forklift outright, Full Expensing gives you 100% relief with no cap. If you are a sole trader or partnership, or buying second-hand, the AIA delivers the same 100% relief up to £1 million.
The 40% FYA comes into play where the other two are unavailable — typically for assets being purchased specifically to lease, or where the AIA limit has already been used in the same tax year.
It's also possible to use different allowances across different assets in the same year. A company might claim Full Expensing on a new counterbalance forklift and use the AIA on refurbished support equipment. The rule is that you can't claim two allowances against the same expenditure — but there's no restriction on using different routes for different purchases.
A Few Practical Points
Claim in the right period. Both Full Expensing and the AIA must be claimed in the accounting period the expenditure is incurred. Neither can be carried forward.
Check second-hand eligibility. Full Expensing is restricted to new and unused equipment. If you're buying used, the AIA is the correct route.
Finance arrangements matter. Equipment purchased on hire purchase may still qualify, but operating leases and rental agreements are treated differently. If you're financing through a third party, take advice before assuming which relief applies.
Keep records. HMRC expects detailed records of capital expenditure — invoices, delivery notes, and payment evidence.
Get specialist advice. The interaction between these three routes can get nuanced, particularly for groups of companies or businesses approaching the £1 million AIA threshold. An accountant familiar with capital allowances will help you follow the most efficient route for your circumstances.
Ready to Buy?
If you're considering a new electric forklift, Kelvin's Mini 10 and Mini 15 both qualify for Full Expensing and the AIA as new equipment purchases. We're happy to provide documentation to support your tax claim.
