Capital Allowances Calculator UK 2025/26 — AIA, Writing Down & First Year Allowances
Capital allowances let businesses deduct the cost of plant and machinery from taxable profits — but not as a normal business expense. Instead, you claim allowances each year. The Annual Investment Allowance (AIA) gives 100% relief on up to £1,000,000 of qualifying expenditure in the year of purchase. This calculator works out your claim and tax saving.
AIA limit 2025/26: £1,000,000. Main pool WDA: 18%/year. Special rate WDA: 6%/year. Low-emission cars (≤50g/km CO2): 100% FYA. High-emission cars: 6% special rate pool. Full Expensing available for companies on new main rate assets only (no £1m limit). Always seek advice from a qualified accountant before filing.
What Qualifies for Capital Allowances?
Capital allowances are available on plant and machinery — a broad category covering most business assets. Qualifying assets include: computers and IT equipment; machinery and tools; office furniture and fittings; vans and lorries (not cars — which have separate rules); refrigeration units; security systems; and more. They do not apply to land, buildings (except certain fixtures), or stock-in-trade.
| Asset type | Allowance | Rate / limit |
|---|---|---|
| Most plant and machinery (new or second-hand) | Annual Investment Allowance | 100% up to £1,000,000 |
| New main rate assets — companies only | Full Expensing | 100% (no limit) |
| Excess above AIA — main rate | Writing Down Allowance | 18%/year on reducing balance |
| Special rate assets (integral features, etc.) | Writing Down Allowance | 6%/year on reducing balance |
| New special rate assets — companies only | 50% First Year Allowance | 50% in year 1, then 6% WDA |
| Low-emission cars (≤50g/km CO2) | First Year Allowance | 100% in year of purchase |
| Higher-emission cars (>50g/km CO2) | Special rate pool WDA | 6%/year |
The Super-Deduction (Ended April 2023)
The 130% super-deduction for companies ended on 31 March 2023 and was replaced by Full Expensing. If you have any assets acquired under the super-deduction still in pool calculations, seek accountant advice on the interaction with disposal rules.
Structures and Buildings Allowance (SBA)
While capital allowances do not apply to buildings in general, the Structures and Buildings Allowance gives 3% per year (straight line) on the cost of constructing, converting, or renovating non-residential buildings and structures. This is separate from plant and machinery allowances. The SBA can be claimed on commercial buildings bought from April 2020 onwards.
Frequently Asked Questions
Yes. Vans (commercial vehicles not primarily designed for carrying passengers) qualify for AIA. Cars do not qualify for AIA — they go into the main rate or special rate pool depending on CO2 emissions, or qualify for 100% FYA if low-emission. HMRC distinguishes cars from vans based on design, not what you use them for. A double-cab pick-up can be a van or a car depending on payload — above 1 tonne payload it is a van.
When you sell an asset on which you claimed AIA or Full Expensing, a balancing charge arises — you add the proceeds to your pool or, if you claimed 100% in year one, the full disposal proceeds are treated as taxable income. This claws back some of the allowance claimed. Keep records of what you paid and received for all capital assets.