Which allowance you get, and why it matters
Buy equipment and you cannot simply deduct it like a normal expense — you claim capital allowances, and which one applies changes the timing enormously. Sometimes all of it lands this year; sometimes a fraction a year for a decade.
Full expensing gives 100% on new main-rate plant and 50% on new special-rate assets. It is uncapped and permanent, and it is for companies buying new and unused assets only. The Annual Investment Allowance gives 100% on up to £1,000,000 a year, covers both pools, and is open to unincorporated businesses and to second-hand kit. For most practices the AIA does everything full expensing would have.
In this sector the spend that matters is typically edging equipment, slit lamps, autorefractors, OCT scanners, dispensing furniture and frame displays.
The test room fit-out is where the money gets stuck
Equipment is straightforward: an OCT scanner, an edger or a set of trial lenses is main-pool plant, and for a company buying new it gets full expensing. The problem is the room around it. Lighting, wiring, the air conditioning that stops the equipment overheating and the plumbing in a contact lens area are integral features, and they sit in the 6% special rate pool.
On a practice refit that is frequently the larger half of the invoice. Splitting the spend properly between plant and integral features — and pointing the Annual Investment Allowance at the 6% side first — is worth doing before the builder invoices, not after.
And the VAT question sits underneath it
An optical practice makes exempt supplies, so it is partly exempt, and the VAT on equipment may not be fully recoverable. The capital allowance is calculated on the cost including any VAT you cannot reclaim — which makes the irrecoverable VAT slightly less painful, but only slightly.