How to Claim 100% First‑Year Allowance on Gas Engineering Innovations

Published by Sidra posted in Gas Engineering Companies on September 8, 2025

The 100% First‑Year Allowance (FYA) on gas engineering innovations is an essential tax relief for businesses investing in qualifying assets. Businesses can immediately receive tax relief by claiming the full cost of certain new and unused assets in the year of purchase. The purpose of this allowance is to incentivise investments in sectors that align with government policy, particularly those that reduce carbon emissions and support the transition to sustainable energy sources.

For gas engineering businesses, FYA offers significant opportunities to claim tax relief on investments in infrastructure and equipment that drive the shift from fossil fuels to greener, low‑carbon alternatives. This includes plant and machinery used in gas refuelling stations, zero‑emission vehicles, and electric vehicle charging equipment. With the government’s commitment to decarbonisation, FYA plays a crucial role in supporting businesses within the gas engineering sector to advance environmentally friendly technologies while benefiting from immediate financial relief.

In the following sections, we’ll explore how businesses can claim the 100% FYA for gas engineering innovations, which gas engineering activities qualify for a 100% first‑year allowance, and the eligibility criteria that must be met. We will also outline how Apex Accountants can assist with navigating the complexities of this tax relief to ensure businesses maximise their claim and stay compliant.

What is the 100% first‑year allowance?

The 100% first‑year allowance (FYA) is a form of UK capital allowance that lets a business deduct the full cost of certain new and unused assets in the year the expenditure is incurred rather than spreading the deduction over several years. First‑year allowances are designed to accelerate tax relief and encourage investment in assets aligned with government policy.

For example, HMRC guidance explains that FYA lets commercial property owners claim up to 100% of qualifying asset costs in the year of purchase. Unlike writing-down allowances, which provide relief gradually, the FYA gives an immediate deduction from taxable profits, improving cash flow.

Why does the UK offer a 100% allowance on gas engineering innovations?

Government policy uses capital allowance for gas engineering companies to drive investment in clean transport and low‑carbon infrastructure. The list of assets eligible for the 100% FYA focuses on reducing emissions and supporting the transition to alternative fuels.

Streets Accountants notes that FYA encourages businesses to invest in plant and machinery. These assets reduce carbon footprints by improving energy and water efficiency.

Innovations in gas engineering drive the shift away from petrol and diesel. CNG, LNG, hydrogen, and biogas refuelling equipment support this transition. Governments incentivise these technologies to speed up adoption.

Which gas engineering activities qualify for a 100% first‑year allowance?

FYA is only available on new and unused assets; second‑hand equipment does not qualify.
Below is a non‑exhaustive list of qualifying categories relevant to gas engineering and low‑carbon transport. These items must not be bought to lease to other people or used in a residential property

Plant and Machinery for Gas Refuelling Stations

FYA covers infrastructure for gas, biogas, and hydrogen refuelling. Examples of qualifying assets include storage tanks and pumps used in gas refuelling stations. Additionally, infrastructure such as CNG (compressed natural gas) refuelling stations, LNG (liquefied natural gas) storage/dispensing systems, and hydrogen refuelling stations are eligible for FYA. Similarly, biogas production and refuelling equipment qualify for this allowance as well.

Zero-Emission Goods Vehicles

New zero-emission vans and lorries, such as battery-electric vehicles, are eligible for 100% FYA. This provides a significant tax incentive for businesses transitioning to greener fleet options. These vehicles must be new and unused to qualify.

Electric Cars with Zero CO₂ Emissions

HMRC guidance specifies that electric cars with zero carbon dioxide emissions are eligible for the First Year Allowance. It’s important to note that second-hand electric cars do not qualify for FYA, as the allowance is only available for new vehicles.

Equipment for Electric Vehicle Charging Points

Equipment installed at business premises to charge electric vehicles (EVs) qualifies for FYA. This includes the installation of chargers for EVs, making it easier for businesses to contribute to the growing network of green transport infrastructure.

Plant and Machinery in Special Tax Sites

Companies investing in plant or machinery for use in designated Freeports or Investment Zones are eligible for 100% FYA. These zones offer enhanced tax relief, encouraging businesses to invest in particular geographic locations.

Plant and Machinery Used in Ring-Fence Oil and Gas Exploration

Oil and gas companies in the UK and the UK Continental Shelf can claim 100% of qualifying plant and machinery costs in the year incurred. This targeted initiative supports UK energy production.

These are just a few examples of the many plant, machinery, and infrastructure assets that qualify for the 100% First Year Allowance, designed to encourage businesses to invest in energy-efficient and zero-emission technologies. If you’re planning to invest in these assets, it’s a good idea to consult with a tax advisor to ensure compliance with the relevant guidelines and maximise the potential tax relief.

Important exclusions:

Assets must be new and unused; used or second‑hand equipment does not qualify.
FYA cannot be claimed when the same expenditure is already covered by annual investment allowance (AIA), full expensing or the 50% special rate FYA.
Purchases made to lease out to other people or for residential lettings do not qualify.
The enhanced 100% allowance for energy‑saving plant and machinery on the Energy Technology List ended on 1 April 2020; however, the ETL still provides useful information on energy‑efficient equipment.

Who can claim the 100% allowance?

Any business (company, partnership or sole trader) incurring qualifying expenditures on the assets mentioned above can claim the allowance, subject to the following conditions:

The claimant must be carrying on a trade and buying the asset for it.
The asset must be new, unused and not acquired for leasing or domestic lettings.
For vehicles, only zero‑emission goods vehicles and new electric cars qualify.
Ring‑fence oil and gas companies can claim FYA for plant and machinery used in exploration or extraction.

In addition, companies subject to corporation tax may prefer to use full expensing for main‑rate plant and machinery acquired after April 2023, which also provides a 100% deduction. However, the gas refuelling assets listed above qualify specifically for FYA. They offer flexibility when businesses exhaust AIA limits or operate outside a company structure.

How to claim the 100% first‑year allowance – step‑by‑step

Identify qualifying assets: Confirm that the equipment falls into one of the eligible categories listed above and that it is new and unused.
Keep accurate records:Retain invoices, contracts, and evidence showing the asset’s type, purchase date, and cost.
Decide on the appropriate allowance: For some assets you may have a choice between FYA, AIA or full expensing. Remember, you cannot claim more than one allowance for the same expenditure.
Calculate the claim: The FYA allows you to deduct 100% of the qualifying cost from your profits. If claiming the full amount would result in a trading loss, you can claim less than 100% and write down the remainder using the standard writing‑down allowances.
Include the claim in your tax return: FYA is claimed as part of your corporation tax or self‑assessment tax return. You should maintain supporting documentation in case HMRC requests evidence.
Seek professional advice: Rules for capital allowance for gas engineering companies change frequently. A specialist accountant can help maximise your claim and ensure compliance.

Examples of qualifying expenditure

The following examples illustrate how gas engineering innovations can benefit from the FYA.

Hydrogen refuelling station: A logistics company builds a hydrogen refuelling point for its fleet. The project includes installing storage tanks, pumps and dispensing equipment. HMRC guidance confirms that plant and machinery for gas refuelling stations—including hydrogen refuelling equipment and storage tanks—qualifies for the FYA. The company can deduct the entire cost in the year of purchase.
Compressed natural gas (CNG) depot: A bus operator invests in a CNG refuelling depot with CNG compressors, storage vessels and filling nozzles. HMA Tax notes that CNG refuelling infrastructure and LNG storage/dispensing systems qualify for FYA. This allows the operator to recover the full expenditure against taxable profits.
Zero‑emission goods vehicles: A wholesaler replaces diesel vans with electric delivery vans. New zero‑emission goods vehicles are specifically listed as qualifying assets. The wholesaler can claim 100% of the cost in the first year, improving cash flow.
EV charge point installation at a freeport: A business located in a UK Freeport installs EV charge points for its staff vehicles. Plant and machinery used in a special tax site qualifies for FYA. The company can claim 100% of the installation cost.
Exploration equipment for oil & gas: An oil‑and‑gas company buys drilling rigs and pumps for exploration in the UK continental shelf. HMRC research states that businesses in exploration or extraction deduct 100% of qualifying plant and machinery costs in the year incurred.

Latest updates and developments (2024‑25)

Full expensing becomes permanent: From April 2023, “full expensing” allows companies to deduct 100% of the cost of new and unused main‑rate plant and machinery. In 2025, this relief will remain in place, operating alongside the FYA, AIA, and 50% special rate allowance. Businesses must choose the most beneficial relief for each asset.
Super‑deduction and 50% special‑rate FYA ended: The temporary super‑deduction (130%) and the 50% special‑rate allowance applied to expenditure between April 2021 and March 2023. They have been replaced by full expensing and the permanent 50% first‑year allowance for special‑rate assets (e.g., integral features like lifts or HVAC).
Decarbonisation investment allowance reduced: Under the Energy Profits Levy, investment in decarbonising oil and gas production attracted an 80% allowance until October 31, 2024. From 1 November 2024 the rate falls to 66%. This decarbonisation allowance is separate from the FYA but may be relevant for oil and gas businesses making low-carbon investments.
Energy-saving FYA abolished: The enhanced FYA for energy-saving plants and machinery on the Energy Technology List ended on 1 April, 2020, for companies, although businesses can still use the ETL as a procurement tool for energy-efficient equipment.
AIA remains at £1 million: The annual investment allowance, available to most businesses, continues to provide 100% relief for qualifying expenditure up to £1 million. FYA can be claimed in addition to AIA, but not for the same expenditure.

How does FYA interact with other allowances?

There are several capital allowance routes. Choosing the right one depends on the asset type and the business’s circumstances:

Full expensing (companies only): 100% deduction for new main‑rate plant and machinery. This policy does not apply to second-hand assets or cars.
Annual investment allowance (AIA): 100% deduction on the first £1 million of qualifying plant and machinery each year. This applies to both new and second-hand assets.
50% first‑year allowance (special‑rate pool): For new special‑rate assets (e.g., integral features). 50% is deducted in year 1, and the remainder goes into the special rate pool at 6%.
Writing‑down allowances: Used when expenditure exceeds AIA or when FYA is not available. Rates are 18% for main‑rate assets and 6% for special‑rate assets.

FYA is often used when businesses have exhausted their AIA or want to preserve the AIA for other expenditure. For companies, full expensing may provide the same benefit, but FYA remains valuable for gas refuelling plant, zero‑emission vehicles and ring‑fenced oil & gas assets where full expensing may not apply or where assets are not main‑rate.

Why claim the 100% first‑year allowance?

Immediate cash‑flow benefit. The entire cost is deducted from taxable profits in year one, freeing up capital for reinvestment.
Encourages greener investment. By targeting zero‑emission vehicles and gas refuelling infrastructure, the FYA supports the UK’s net‑zero and clean‑transport goals.
Flexibility for ring‑fence trades. Oil and gas businesses can accelerate the write‑off of exploration plant.
Works alongside AIA and full expensing. The FYA can be used when other allowances are exhausted or less efficient.
Enhanced ESG credentials. Investing in clean refuelling infrastructure signals a commitment to environmental, social, and governance goals.

How Apex Accountants can help

At Apex Accountants we specialise in navigating the complexities of capital allowances. We can:

Review your assets to ensure gas refuelling equipment and zero‑emission vehicles qualify for FYA.
Maximise your claim by coordinating FYA, AIA, full expensing and other reliefs.
Prepare tax computations and evidence to support your claim and handle HMRC queries.
Advise on future investments so that your business benefits from the latest allowances and remains compliant.

The capital allowances landscape is evolving rapidly. Businesses investing in gas engineering innovations today can enjoy significant tax savings, but careful planning is essential. Please contact our team to discuss how the 100% first‑year allowance can support your gas engineering innovations.