Capital allowances
Capital allowances let businesses deduct the cost of qualifying plant, machinery and equipment from taxable profits. Figures below include the changes announced at Autumn Budget 2025.
Main allowances
| Allowance | Rate | Notes |
|---|---|---|
| Annual Investment Allowance (AIA) | 100% up to £1,000,000 | Available to all businesses, permanent limit |
| Full expensing | 100% | Companies only, new and unused main-rate plant and machinery |
| 50% first-year allowance | 50% | Special-rate assets qualifying for full expensing |
| New 40% first-year allowance (from 1 January 2026) | 40% | Main-rate assets where full expensing and AIA do not apply, e.g. leasing and unincorporated businesses; excludes cars and second-hand assets |
| Writing-down allowance, main pool | 14% (was 18%) | Reducing balance, from 1 April 2026 (corporation tax) or 6 April 2026 (income tax) |
| Writing-down allowance, special rate pool | 6% | Longer-life assets, integral features, high-emission cars |
- Cars have their own rules: 100% first-year allowance for zero-emission cars, otherwise writing-down allowances at 18% (low CO2) or 6%.
- Structures and Buildings Allowance continues at 3% straight line over 33 years.
Common questions
Why did the main writing-down allowance change to 14%?
At Autumn Budget 2025 the government reduced the main-pool writing-down allowance from 18% to 14% from April 2026, alongside a new 40% first-year allowance for assets where full expensing is not available.
What is full expensing?
A permanent first-year allowance letting companies write off the full cost of new, unused main-rate plant and machinery in the year of purchase.
Figures from Claim capital allowances . For guidance only, not tax advice. Always check current HMRC guidance.
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