UK Capital Allowances Rates

Every capital allowance rate

An item that qualifies for more than one allowance can use whichever you choose, but never two against the same cost. Anything you do not relieve up front is written down in the pool it belongs to.

What changed in April 2026

Budget 2025 cut the main rate of writing down allowance from 18% to 14% — 4% off the rate at which historic main pool spending is relieved — and paired it with a new permanent 40% first-year allowance for new spending. The special rate pool was left alone at 6%. The cut takes effect on 1 April 2026 for Corporation Tax and 6 April 2026 for Income Tax.

Main pool rate for a 12-month accounting period ending on the date shown, worked out by HMRC's day-weighting method. Periods shorter or longer than 12 months need a further adjustment on top of the rate.

The cut delays relief rather than removing it — the balance still gets written down in full, just more slowly.

Capital allowances on cars

Cars are the exception to almost every rule here. They cannot use the £1,000,000 Annual Investment Allowance, full expensing, the 50% allowance or the new 40% allowance, so unless the car is new, unused and zero-emission you write it down in a pool at 14% or 6% a year. Which one depends on the car's CO2 emissions and the date you bought it — the thresholds have tightened four times, and it is the purchase date that fixes them for the life of the car.

Main and special rates apply from 1 April for businesses that pay Corporation Tax and 6 April for businesses that pay Income Tax; the 100% first-year allowance rate applies from 1 April for everyone. A car with no emissions figure uses the special rate, unless it was registered before 1 March 2001, and cars bought before April 2009 sit in the main pool.

Sole traders and partnerships with no company partners can claim simplified mileage instead, but not on a vehicle already claimed another way. Employees cannot claim capital allowances on a car at all — see the Mileage Allowance Calculator.

Annual Investment Allowance

The AIA is £1,000,000 and has been since 1 January 2019. It deducts the full cost of most plant and machinery in the year you buy it, and unlike full expensing it covers second-hand assets and is open to sole traders and partnerships as well as companies. You get a fresh allowance each accounting period. What it will not cover: cars, items you owned for another reason before the business used them, and gifts — those go to writing down allowances instead.

A period that is not 12 months is pro-rated — a 9-month period gets nine twelfths of £1,000,000, or £750,000. Two limited companies under the same control share one AIA between them and can split it as they like; a sole trader with two genuinely separate businesses usually gets one each, unless the businesses share premises or do similar things.

Which pool an asset goes in

Writing down allowances are claimed pool by pool, not asset by asset, on the reducing balance. There are three kinds of pool and the rate follows the pool, so getting the classification right matters more than the arithmetic.

Worked example: one period on the main pool

HMRC's own example. The main pool opens at £9,000. You buy a machine for £1,200 and sell a desk for £200, so the pool stands at £10,000 before any allowance. At the main rate of 14% the claim for the period is £1,400, leaving a tax written down value of £8,600 to open the next period with.

You never have to claim the full allowance. Anything you leave unclaimed simply stays in the closing balance and is relieved later, which is worth doing in a year when your profits are already covered by the Personal Allowance.

What each allowance is worth in year one

The deduction from profits in the accounting period the asset is bought, before any tax rate is applied. The AIA and full expensing columns are the same 100%; which one you use depends on whether you are a company and whether the asset is new.

Every route relieves the whole cost eventually — the columns differ in how long it takes. The 40% column leaves the other 60% in the main pool, written down at 14% a year from the next accounting period.

Structures and Buildings Allowance

Buildings themselves are outside the plant and machinery pools. Instead the Structures and Buildings Allowance gives 3% a year on a straight line — it was 2% until April 2020 — over an allowance period of 33 and one third years, which is what 3% a year takes to relieve the cost in full. All the construction contracts must have been signed on or after 29 October 2018, the structure must not be residential, and you need a written allowance statement before you can claim.

The costs that count are design fees, site preparation, construction, renovation and conversion, and fitting out. Land, planning permission, financing, legal costs, landscaping and anything already relieved as plant and machinery do not. Claiming SBA can increase the Capital Gains Tax or Corporation Tax due when you sell the building, so it is worth checking the two together rather than claiming automatically.

Allowance period 33.33 years from the later of first non-residential use and the date the expenditure is incurred.