HMRC Capital Allowances Calculator
Compare all available UK capital allowances side by side — modelled on Capital Allowances Act 2001 and HMRC guidance HS252
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Available Allowances
Summary — WDA
Pool Balance — All Allowances Compared
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Disclaimer: This calculator is provided for general information and demonstration purposes only. Results are estimates modelled on the Capital Allowances Act 2001 and HMRC guidance HS252. Main pool WDA: 25% (pre-Apr 2008), 20% (Apr 2008), 18% (Apr 2012), 14% (Apr 2026). Special rate pool: 10% (Apr 2008), 8% (Apr 2012), 6% (Apr 2019). Super Deduction (130%): companies only, 1 April 2021 to 31 March 2023. 50% SR FYA: companies only, from 1 April 2021 (temporary then permanent). Full Expensing and 50% SR FYA permanent from 1 April 2023. The 40% FYA applies from 1 January 2026. Structures and Buildings Allowance (SBA): 2% from 29 October 2018, 3% from 1 April 2020. AIA limits have changed since April 2008. AssetAccountant does not guarantee accuracy or completeness. This calculator does not constitute tax advice — always verify with a qualified UK tax adviser.
Use the free calculator above to compare every UK capital allowance available for your asset — Annual Investment Allowance (AIA), Full Expensing, the new 40% First-Year Allowance, Writing Down Allowances (WDA), Super Deduction, and Structures and Buildings Allowance (SBA) — all side by side, updated for the April 2026 rate changes.
What Are Capital Allowances? (And Why They Are Not the Same as Depreciation)
Capital allowances are the UK tax system’s mechanism for giving businesses tax relief on capital expenditure. When your business buys a capital asset — plant, machinery, IT equipment, commercial vehicles, or a business property — you cannot deduct the accounting depreciation charge from your taxable profits. Instead, HMRC does not accept depreciation as a tax deduction.
For a full breakdown of how accounting depreciation and tax depreciation differ in practice, see our guide on accounting vs tax depreciation.
Instead, the Capital Allowances Act 2001 (CAA 2001) provides a separate system of deductions called capital allowances. Your accounting depreciation is added back on your Corporation Tax return (CT600) or Self Assessment, and replaced with whichever capital allowance applies to the asset.
As a result, your tax bill in the year of a major capital purchase can be dramatically lower than your profit and loss account would suggest — particularly if you use AIA or Full Expensing to deduct 100% of the cost upfront.
The five main types of capital allowance available to UK businesses in 2026 are:
| Allowance | Rate | Who Can Claim | Limit |
|---|---|---|---|
| Annual Investment Allowance (AIA) | 100% | All businesses | £1,000,000/yr |
| Full Expensing | 100% | Limited companies only | No cap |
| 40% First-Year Allowance (new from Jan 2026) | 40% + 14% WDA on remainder | All businesses | No cap |
| Writing Down Allowance — main pool | 14%/yr | All businesses | No limit |
| Writing Down Allowance — special rate pool | 6%/yr | All businesses | No limit |
| Structures and Buildings Allowance (SBA) | 3%/yr straight-line | All businesses | No limit |
one asset?
What Changed in April 2026: The Most Important Capital Allowances Update in 14 Years
2026 brought the most significant changes to UK capital allowances since the main pool WDA was last cut in 2012. Two changes took effect from the Autumn Budget 2025:
Main Pool WDA Reduced from 18% to 14%
The main pool Writing Down Allowance fell from 18% to 14% per year from 1 April 2026 for companies (6 April 2026 for income tax businesses). This directly affects around 650,000 UK businesses that hold main pool balances not covered by AIA or Full Expensing — ICAEW figures cited in Budget analysis.
For businesses with large brought-forward pool balances — common in manufacturing, transport, and construction — this is a real cash flow impact. A £500,000 pool balance that previously generated £90,000 WDA now generates only £70,000.
Important: if your accounting period straddles 1 April 2026, a blended rate applies. For example, a company with a 31 December year end uses approximately 14.99% WDA for the full year ended 31 December 2026 (90 days at 18% + 275 days at 14%). The calculator above handles this automatically.
However, the special rate pool WDA remains unchanged at 6% per year.
New 40% First-Year Allowance Introduced from 1 January 2026
To partially offset the WDA reduction, a new permanent 40% First-Year Allowance was introduced from 1 January 2026 for qualifying main-rate plant and machinery. This is available to:
- Limited companies
- Sole traders and partnerships (from 6 April 2026)
- Businesses buying assets for UK leasing — previously excluded from Full Expensing
The remaining 60% of the asset’s cost enters the main pool and receives WDA at 14% per year in subsequent periods.
Key restriction: the 40% FYA does not apply to cars, second-hand assets, or assets leased to overseas businesses.
In most SME scenarios, the £1m AIA fully covers capital expenditure and the 40% FYA is irrelevant. It becomes important for: unincorporated businesses spending above £1m; leasing companies; and companies wanting to leave the AIA intact for other purchases.
UK Capital Allowances Explained: Every Allowance Type in 2026
Annual Investment Allowance (AIA) — 100% for All Businesses
For most UK businesses, the AIA is the most widely used capital allowance and the right starting point. In simple terms, it gives 100% of the qualifying cost as a deduction in the year of purchase, up to £1,000,000 per tax year.
It can be claimed by sole traders, partnerships, and limited companies — all business types.
What qualifies: most plant and machinery, including:
- Machinery, tools, and manufacturing equipment
- Computers, servers, and IT equipment
- Office furniture and fixtures
- Commercial vehicles (vans, lorries, motorcycles)
- Refrigeration equipment, security systems
- Integral building features (electrical systems, heating, lifts) — these go in the special rate pool but still qualify for AIA
What does not qualify for AIA:
- Cars (any car, regardless of CO₂ emissions)
- Assets acquired for leasing
- Gifts
- Assets already owned personally before use in the business
AIA limit notes: the £1m limit must be split for accounting periods shorter than 12 months. Connected businesses and groups must share a single AIA limit — this is a common oversight that HMRC scrutinises.
For most UK SMEs spending under £1m per year on capital assets, AIA gives immediate 100% relief with no complexity and no “new and unused” condition. On disposal, proceeds are brought back into the relevant pool (general or special rate) and reduce the pool balance. The normal pooling rules apply, and any balancing charge or allowance depends on the overall pool position rather than the individual asset. It is almost always the optimal first choice.
Full Expensing — 100% for Limited Companies, No Cap
Since 1 April 2023, Full Expensing has provided 100% upfront relief on qualifying expenditure with no monetary cap — meaning a company spending £10m on new plant can deduct the entire £10m in year one.
However, it can only be claimed by limited companies subject to corporation tax. Sole traders and partnerships cannot claim Full Expensing.
Conditions:
- Asset must be new and unused
- Main pool assets only (not special rate pool)
- Not cars
- Not assets for leasing — HMRC treats assets provided for leasing or hire as excluded from Full Expensing (CA23195). An exception may apply for background plant or machinery within a building where the asset is not the primary subject of the lease. The 40% FYA partially fills this gap from January 2026.
Balancing charge on disposal:
Unlike AIA, Full Expensing triggers a full balancing charge when the asset is sold. If you claim 100% in year one and sell the asset three years later for £20,000, that £20,000 is immediately taxable. For this reason, AIA is usually preferable where the expenditure falls within the £1m limit.
50% First-Year Allowance for special rate assets: for integral features, long-life assets, and other special rate pool expenditure, companies can claim a 50% FYA instead of the 6% WDA. The remaining 50% enters the special rate pool at 6% WDA. Again, AIA is generally preferable if within the limit.
Writing Down Allowance (WDA) — The Standard Ongoing Relief
Where no upfront relief applies, WDA is the fallback relief for pool balances not covered by AIA or a First-Year Allowance. Unlike AIA and FYAs, it does not give immediate full relief — it reduces the pool on a reducing balance basis each year.
Current rates from April 2026:
- Main pool: 14% per year (down from 18%)
- Special rate pool: 6% per year (unchanged)
Small pools allowance
When a pool balance falls to £1,000 or less, the entire remaining amount can be written off in one year (CAA 2001, s56). This prevents businesses from carrying tiny balances forward for decades.
Rate change rows in the schedule: the calculator flags years where a WDA rate change falls within an accounting period, applying the correct blended rate automatically.
In practice, WDA is most relevant for:
- Businesses with large carried-forward pool balances from prior years
- Cars (WDA is the only option for most business cars)
- Expenditure above the AIA limit where Full Expensing is unavailable
- Second-hand assets that cannot access FYAs
40% First-Year Allowance — New from January 2026
Where AIA and Full Expensing are unavailable or already exhausted, the new 40% FYA provides a meaningful acceleration of relief over standard WDA. It applies from 1 January 2026 (1 January for CT purposes; 6 April 2026 for income tax).
Comparison against WDA for a £100,000 asset:
| Year | 40% FYA + WDA | WDA only (14%) |
|---|---|---|
| Year 1 | £40,000 | £14,000 |
| Year 2 | £8,400 (14% of £60k) | £12,040 |
| Year 3 | £7,224 | £10,354 |
| Total (3 yrs) | £55,624 | £36,394 |
The 40% FYA front-loads relief significantly — improving cash flow for businesses investing in new equipment.
Structures and Buildings Allowance (SBA)
The SBA provides 3% per year straight-line relief on the construction cost of new commercial buildings from 29 October 2018. It is completely separate from the plant and machinery pool system.
Key points:
- Rate was 2% from October 2018; rose to 3% from April 2020
- Applies to commercial offices, retail, industrial buildings, hotels, care homes, and qualifying renovations
- Does not apply to residential property, land, or plant and machinery within the building
- The allowance transfers to a buyer on sale of the property — they continue claiming the remaining relief
- No AIA, no WDA pools, no small pools allowance — the 3% runs until the expenditure is fully written off (approximately 33 years)
What Assets Qualify for Capital Allowances in the UK?
Plant and Machinery — Main Pool (18% → 14% WDA; eligible for AIA)
Most business assets fall into the main pool. This includes:
- Computers, laptops, tablets, servers, network equipment
- Office furniture, desks, chairs, shelving
- Telephone systems and PBX equipment
- Manufacturing machinery, industrial pumps, compressors
- Commercial vehicles: vans, lorries, trucks, motorcycles
- Agricultural machinery and irrigation equipment
- Catering and hospitality equipment
- Tools, security systems, air conditioning units
- EV charging points (also eligible for 100% FYA to April 2027)
- Cars with CO₂ emissions of 50 g/km or less
Integral Features and Special Rate Assets (6% WDA; eligible for AIA)
These go into the special rate pool and receive the lower 6% WDA, but crucially still qualify for AIA — making AIA especially valuable here:
- Electrical systems and wiring
- Cold water systems
- Heating, ventilation, and air conditioning systems
- Lifts and escalators
- Thermal insulation
- Long-life assets (expected useful life of 25+ years)
- Solar panels
- Cars with CO₂ emissions above 50 g/km
What Does Not Qualify
- Land — never qualifies for capital allowances
- Residential property — no capital allowances (though the SBA applies to commercial buildings)
- Purely decorative assets — items with no functional purpose in the business
- Leased assets — the lessee generally cannot claim (the lessor may claim WDA or the new 40% FYA)
- Assets used outside the UK — certain restrictions apply
Capital Allowances on Business Cars: Special Rules
Cars are treated differently from all other business assets and are excluded from AIA, Full Expensing, and the 40% FYA. The only capital allowances available for business cars are:
| Car Type | CO₂ Emissions | Allowance Available |
|---|---|---|
| Zero-emission (new) | 0 g/km | 100% FYA (to April 2027) |
| Low-emission | 1–50 g/km | 14% WDA — main pool |
| Higher-emission | Above 50 g/km | 6% WDA — special rate pool |
Private use restriction: if a car is used for both business and private purposes, only the business use proportion of the WDA can be claimed. These cars must be kept in a single-asset pool (not the general main pool) so the restriction can be applied correctly on disposal.
Zero-emission car example: a company purchases a new electric car for £45,000 in June 2026. Using the 100% FYA, the full £45,000 is deducted in year one — a corporation tax saving of £11,250 at 25%. A petrol car with CO₂ above 50 g/km at the same price would generate only £2,700 WDA in year one.
Capital Allowances: Limited Company vs Sole Trader — What's the Difference?
In practice, this is one of the most frequently searched questions on the topic, and the answer matters.
Available to both (sole traders and limited companies):
- AIA up to £1,000,000 per year
- WDA at 14% (main pool) and 6% (special rate pool)
- 40% FYA from January 2026 (income tax: from 6 April 2026)
- 100% FYA for zero-emission cars and EV chargepoints
- SBA at 3% per year
Available to limited companies only:
- Full Expensing (100%, no cap, main pool new assets)
- 50% First-Year Allowance for special rate pool assets
- Super Deduction (historic — April 2021 to March 2023)
Key implication for sole traders:
You cannot claim Full Expensing. For capital expenditure up to £1m, AIA gives the same 100% result. Above £1m, the 40% FYA is your best accelerated option from January 2026.
Cash basis accounting note: sole traders and partnerships using the cash basis (default from 2024/25) can only claim capital allowances on cars. All other capital expenditure is treated as a deductible revenue expense directly.
How to Claim Capital Allowances on Your Tax Return
For Limited Companies (CT600)
- Complete the capital allowances supplement on your CT600
- Enter AIA claimed in box 690
- Enter WDA and other allowances in the relevant pool boxes
- The total capital allowances reduce your adjusted profit figure before calculating corporation tax
- Maintain a capital allowances schedule showing each pool balance, additions, disposals, and allowances claimed — this is what HMRC will request in an enquiry
For Sole Traders (Self Assessment)
- Complete the capital allowances section of your Self Assessment return (SA103 or SA104)
- Report each pool separately — main pool, special rate pool, single asset pools (e.g. cars with private use)
- The total reduces your taxable profit on which income tax and Class 4 NI are calculated
Record-Keeping Requirements
HMRC requires you to keep records sufficient to support your capital allowances claim, including:
- Date of purchase and cost of each asset
- Description and nature of use in the business
- Pool allocation (main pool, special rate, single asset)
- Disposal proceeds and date of disposal
- Private use percentage (for assets with mixed use)
Good records are particularly important for assets claiming Full Expensing, where a balancing charge arises on disposal — the amount of the charge depends on correctly tracking which pool the asset was in.
Capital Allowances Quick Reference: Which Allowance Should You Claim?
Use this hierarchy for most UK businesses:
Step 1 — AIA first. For any qualifying plant and machinery up to £1,000,000, claim AIA. It gives 100% immediate relief, applies to all business types, works for second-hand assets, and carries no immediate balancing charge.
On disposal, proceeds are brought back into the relevant pool and WDA continues in the normal way.
Step 2 — Full Expensing for companies above £1m. If you are a limited company spending above the AIA limit on new, unused main pool assets, claim Full Expensing for the excess. Be aware of the balancing charge on disposal.
Step 3 — 40% FYA where AIA/Full Expensing cannot apply. For leasing assets, expenditure by unincorporated businesses above the AIA limit, or where you prefer not to use AIA, the 40% FYA from January 2026 provides meaningful front-loaded relief.
Step 4 — WDA for everything else. Cars, brought-forward balances, second-hand assets above the AIA limit, and expenditure not covered by steps 1–3 all use WDA at 14% (main pool) or 6% (special rate).
For commercial buildings: claim SBA at 3% straight-line alongside your plant and machinery allowances. They are separate calculations.
For cars: always separate from other plant. Use 100% FYA for new zero-emission cars, 14% WDA for low-emission, 6% WDA for higher-emission.
Worked Examples: Capital Allowances in Practice
Example 1: SME Limited Company — Typical Annual Capital Spend
A retail company purchases £120,000 of new IT equipment and office fit-out in May 2026. All assets are new, qualifying main pool plant and machinery.
- AIA available: £1,000,000 — fully covers the £120,000
- Year 1 deduction: £120,000 (100%)
- Corporation tax saving at 25%: £30,000 saved in year one
Example 2: Manufacturing Company — Large Capital Programme
A manufacturer spends £4,000,000 on new production equipment in a single period. All new, unused, main pool.
- AIA covers first £1,000,000 → deduction: £1,000,000
- Full Expensing covers remaining £3,000,000 → deduction: £3,000,000
- Total year 1 deduction: £4,000,000 (100%)
- Corporation tax saving at 25%: £1,000,000
Without Full Expensing, the excess £3m above the AIA limit would generate WDA of only £420,000 (14%) in year one — a difference of £2,580,000 in year one deductions alone.
Example 3: Sole Trader — Leasing Business
A sole trader purchases £300,000 of new plant for leasing to UK customers in March 2026.
- Full Expensing: not available (sole trader)
- AIA: available — covers the full £300,000 at 100%
- Year 1 deduction: £300,000
If the purchase had been £1,200,000, the AIA would cover £1,000,000, and the new 40% FYA from January 2026 would give 40% relief on the remaining £200,000 (£80,000) — previously only 18% WDA (£36,000) was available on the excess.
Example 4: Property-Owning Business
A company constructs a new office building for £2,000,000 (construction cost, excluding land). Practical completion: June 2026.
- Plant and machinery within the building (electrical, HVAC, lifts): qualify for AIA or WDA via integral features
- The building structure itself: qualifies for SBA at 3% = £60,000/year for approximately 33 years
- Total SBA over life of allowance: £2,000,000 (full write-off)
Managing Your Full UK Asset Register
The calculator above handles a single asset purchase. In practice, most businesses track dozens or hundreds of assets across multiple pools — with different purchase dates, disposal events, pool balances carried forward, and the additional complexity of the April 2026 WDA rate change affecting blended rates for any year-end that straddles 1 April.
Managing this in spreadsheets creates real risk:
- Pool balances get miscalculated when assets are added mid-year
- Rate change blending (the 18%/14% transition) is easy to get wrong manually
- Disposal events and balancing charges are frequently missed
- Integral features in commercial properties are routinely under-claimed
- There is no audit trail to support HMRC enquiries
AssetAccountant automates the entire capital allowances workflow for UK businesses:
- Full pool tracking — main pool, special rate pool, single-asset pools
- Automatic WDA rate change handling (18% → 14% transition, blended rates)
- AIA and Full Expensing allocation optimised across your register
- SBA schedules running alongside P&M pools
- Disposal events, balancing charges, and balancing allowances calculated automatically
- Reconciliation to your general ledger via Xero, QuickBooks Online, Sage Intacct, and Microsoft Dynamics 365
- HMRC-compliant schedules ready to support your CT600
Thousands of UK accountants and finance teams use AssetAccountant to eliminate manual spreadsheet risk and ensure every available allowance is claimed correctly.
Start your free 30-day trial — no credit card required, full access from day one.
Sources: Capital Allowances Act 2001 (as amended by Finance Act 2025-26) | HMRC Guidance HS252 | HMRC Capital Allowances Manual (CA23195) | GOV.UK: Claim Capital Allowances | ICAEW Tax Faculty: Budget Changes to Capital Allowances (February 2026) | Deloitte TaxScape: Capital Allowances Autumn Budget 2025
Rates and rules current as of April 2026. Main pool WDA 14% applies from 1 April 2026 (CT) / 6 April 2026 (IT). 40% FYA from 1 January 2026. AIA limit £1,000,000. Always verify capital allowances claims with a qualified UK tax adviser — this article does not constitute tax advice.
