Calculate exactly how much tax relief your UK business can claim on any asset purchase. Covers Annual Investment Allowance (AIA), Full Expensing, the new 40% First-Year Allowance, 14% main pool WDA and 6% special rate pool WDA — with multi-asset pooling and projected annual schedules.
Capital allowances are the UK tax system's method for giving businesses tax relief on capital expenditure — the cost of buying fixed assets such as machinery, equipment, computers, commercial vehicles, office furniture and, with restrictions, business cars. Unlike day-to-day expenses such as wages or rent, the cost of a capital asset cannot be deducted directly from profits in the year of purchase for accounting purposes. Instead, HMRC provides capital allowances as a separate mechanism to relieve this expenditure for tax purposes.
In practice, the accounting depreciation charge in your profit and loss account is added back on your Corporation Tax return (CT600) or Self Assessment, and replaced with the capital allowance claim. The result is that the timing of your tax relief — and how much you receive in any given year — depends entirely on which allowance type applies to your asset and which pool it enters.
2026 is a particularly important year for UK capital allowances. The main pool WDA has been reduced from 18% to 14% from 1 April 2026, a material change for businesses that cannot use AIA or Full Expensing. At the same time, a new 40% First-Year Allowance for companies on main rate pool expenditure was introduced from 1 January 2026 — sitting between the generous 100% Full Expensing and the reduced 14% WDA. Understanding the interaction of these rates and choosing the right allowance for each asset is essential for maximising your tax position in 2026.
Five calculator tabs — AIA, Full Expensing, 40% FYA, main pool WDA and multi-asset pool builder. Each generates a full year-by-year allowance and tax saving schedule.
Every rate, pool and allowance type for UK businesses in 2026 — with key eligibility conditions.
Up to £1,000,000 per year. Sole traders, partnerships and companies. Qualifying plant and machinery, office equipment, vans. Not available on cars, assets acquired for leasing, gifts. AIA can be shared between connected businesses.
Companies only. No monetary cap. Main rate new assets: 100%. Special rate new assets: 50% FYA. Must be new (not second-hand). Cannot be claimed on cars, assets for leasing, or assets used outside the UK. Made permanent from Autumn Statement 2023.
Companies only, from 1 January 2026. New main rate plant and machinery. 40% deducted in year one; remaining 60% enters main pool at 14% WDA annually. Use where Full Expensing or AIA are exhausted or unavailable.
Reduced from 18% → 14% from 1 April 2026. Applies to most plant and machinery, vans, office equipment, low-emission cars (1–50g/km). Used when AIA, Full Expensing and 40% FYA are unavailable or exhausted. Reducing balance pool.
Unchanged at 6% per year. Covers: integral building features (heating, lighting, AC, lifts), long-life assets (25yr+ useful life), solar panels, and cars emitting 51g/km or more CO₂. Very slow relief — maximise AIA claim on special rate assets first.
New zero-emission / electric cars qualify for a 100% First-Year Allowance in the year of purchase. Cannot claim AIA on cars. The 100% FYA for electric cars is the most generous car-specific relief and makes EVs significantly more tax-efficient than petrol/diesel for companies.
Straight-line 3% per year on new commercial buildings and structures (not land). Freeport SBA: 10%. Cannot be claimed on dwelling houses or structures purchased before 29 October 2018. SBA is claimed separately from plant and machinery allowances.
Where the main pool balance or special rate pool balance falls to £1,000 or less at the end of an accounting period, the entire remaining balance can be written off in one year. Avoids carrying tiny pool balances forward indefinitely at 14% or 6% WDA.
Quick reference for all common UK business asset types, their HMRC pool classification and optimal allowance strategy for 2026.
| Asset Type | HMRC Pool | Best Allowance 2026 | WDA Rate (if used) | AIA Available? | Notes |
|---|---|---|---|---|---|
| Plant & Machinery (general) | Main Pool | AIA (100%) or Full Expensing | 14% | ✅ Yes | Most common business asset category |
| Computers / Laptops / Servers | Main Pool | AIA (100%) or Full Expensing | 14% | ✅ Yes | New or second-hand both qualify for AIA |
| Office Furniture & Equipment | Main Pool | AIA (100%) or Full Expensing | 14% | ✅ Yes | Desks, chairs, printers, phones |
| Commercial Van / HGV / Lorry | Main Pool | AIA (100%) | 14% | ✅ Yes | AIA preferred — max Year 1 relief |
| Zero-Emission / Electric Car | Main Pool | 100% FYA (Year 1) | 14% | ❌ No — cars excluded | 100% FYA most tax-efficient option |
| Car — 1 to 50g/km CO₂ | Main Pool | 14% WDA only | 14% | ❌ No — cars excluded | AIA/FE cannot be claimed on cars |
| Car — 51g/km+ CO₂ (most petrol/diesel) | Special Rate Pool | 6% WDA only | 6% | ❌ No — cars excluded | Very slow relief — consider EVs instead |
| Integral Building Features | Special Rate Pool | AIA (100%) up to £1M limit | 6% | ✅ Yes | Heating, lighting, AC, lifts, electrics |
| Long-Life Assets (25yr+ life) | Special Rate Pool | AIA (100%) up to £1M limit | 6% | ✅ Yes | Heavy industrial machinery with long life |
| Solar Panels / Photovoltaics | Special Rate Pool | AIA (100%) up to £1M limit | 6% | ✅ Yes | Or 50% FYA under Full Expensing (companies) |
| EV Charging Points | Main Pool | 100% FYA | 14% | ✅ Yes | 100% FYA available for EV charge points |
| New Commercial Building / Structure | SBA (separate) | 3% SBA straight-line | 3% p/a | ❌ No — building itself | Freeport SBA: 10%. P&M within building separate. |
| Pickup Truck (single cab, payload 1t+) | Main Pool | AIA (100%) | 14% | ✅ Yes | Treated as van/commercial vehicle |
| Double-Cab Pickup (post Apr 2025) | Special Rate Pool | 6% WDA only | 6% | ❌ No — reclassified as car | HMRC reclassification Apr 2025 — treated as car |
A plain-English walkthrough of the process from asset purchase to your tax return claim in 2026.
Buy the asset for use in your business. Record it as a fixed asset in your accounts — capitalise rather than expense immediately. Note the cost, date and whether the asset is new or second-hand.
Determine whether the asset goes into the main pool (most plant and machinery), special rate pool (integral features, high-emission cars, long-life assets) or a single asset pool (assets with private use).
For most assets: claim AIA (100%, up to £1M) or Full Expensing (100%, companies only, no cap). Where these are unavailable or exhausted: use 40% FYA (companies, from Jan 2026) or WDA (14% main pool / 6% special rate).
Your accounting depreciation charge (straight-line or reducing balance) is added back to your profit on the CT600 or Self Assessment. It does not reduce your taxable profit — only the HMRC capital allowance does.
The capital allowance amount is deducted from your adjusted profit to arrive at taxable profit. For example: Adjusted profit £200,000 − AIA £80,000 = Taxable profit £120,000 × 25% = £30,000 Corporation Tax.
Any pool balance not fully relieved (e.g. where WDA applies) is carried forward to the next period. WDA continues at 14% or 6% on the reducing balance year after year until the pool is disposed of or reaches the £1,000 small pool threshold.
Related UK capital allowances tools and official HMRC guidance for businesses in 2026.
Common questions about HMRC capital allowances for UK businesses in 2026.