Free tool
Capital allowances calculator for companies
Most companies can deduct the full cost of new plant, machinery and vans in the year they buy them, using the £1 million annual investment allowance or full expensing. What is left goes into a pool that gets a writing-down allowance each year: 14% for the main pool from 1 April 2026 and 6% for the special rate pool.
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Example
Worked example
Accounting period start date: 1 April 2026; Accounting period end date: 31 March 2027; New plant, machinery and vans: £40,000; Second-hand plant, machinery and vans: £15,000; Main pool brought forward: £60,000. Enter your own details to replace this example.
For the period 1 April 2026 to 31 March 2027, the company can claim £63,400 of capital allowances: £55,000 annual investment allowance and £8,400 main pool writing-down allowance (14%). £51,600 stays in the main pool for later years. At the 25% main rate that is about £15,850 less Corporation Tax (£12,046 at 19%).
- Total capital allowances
- £63,400
- Annual investment allowance
- £55,000 (of £1,000,000 available)
- Main pool writing-down allowance (14%)
- £8,400
- Special rate pool writing-down allowance (6%)
- £0
- Main pool carried forward
- £51,600
- Special rate pool carried forward
- £0
- Illustration: Corporation Tax saved at 25%
- £15,850
- Illustration: Corporation Tax saved at 19%
- £12,046
How the pools work out
| Main pool | Special rate pool | |
|---|---|---|
| Brought forward | £60,000 | £0 |
| Added this period | £0 | £0 |
| Less sale proceeds | £0 | £0 |
| Balance | £60,000 | £0 |
| Less writing-down allowance Main 14%; special rate 6% | £8,400 | £0 |
| Carried forward | £51,600 | £0 |
Where each purchase went
| Purchase | Cost | Annual investment allowance | First-year allowance | Into the pool |
|---|---|---|---|---|
| New plant, machinery and vans | £40,000 | £40,000 | £0 | £0 |
| Second-hand plant, machinery and vans | £15,000 | £15,000 | £0 | £0 |
- The annual investment allowance is used first, where it is worth most: second-hand special rate items, then second-hand main rate items, then new special rate items, then new main rate items. Full expensing and the 50% first-year allowance cover spending above it. The relief is the same, but an asset covered by the annual investment allowance doesn't make its whole sale price a balancing charge when it is sold.
- The tax figures are an illustration: the rate depends on the company's total taxable profits (19% up to £50,000, 25% over £250,000, and an effective 26.5% on profits between the two under marginal relief). Taxley's Corporation Tax calculator works out the full bill: https://taxley.co.uk/corporation-tax-calculator.
- Not covered: the 40% first-year allowance for spending from 1 January 2026, assets bought to lease out, the structures and buildings allowance, property letting businesses, the period in which a company stops trading, purchases from connected people, private use, and sales of special rate items.
- The calculator works in whole pounds: costs are rounded down and sale proceeds up.
Sources: GOV.UK: Annual Investment Allowance GOV.UK: Check if you can claim full expensing or 50% first-year allowances GOV.UK: Writing down allowances – rates and pools legislation.gov.uk: Capital Allowances Act 2001, Part 2 (plant and machinery)
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What is full expensing?
Full expensing is a 100% first-year allowance for companies. A company can deduct the whole cost of new and unused main-rate plant and machinery, such as equipment and vans, from its profits in the year it buys it. It applies to spending from 1 April 2023, has no upper limit and does not cover cars.
New special rate items, such as electrical, heating and lighting systems in a building, get a 50% first-year allowance instead, and the other half goes into the special rate pool. Items bought to lease out don't qualify. GOV.UK: Check if you can claim full expensing or 50% first-year allowances.
Full expensing and the Annual Investment Allowance both give 100% relief on new plant. This calculator uses the Annual Investment Allowance first, because a sale of an asset that had full expensing turns its whole sale price into a balancing charge, while an asset covered by the allowance only reduces the pool.
How does the Annual Investment Allowance work?
The Annual Investment Allowance (AIA) lets a company deduct up to £1,000,000 a year of spending on plant and machinery, new or second-hand, in the year it buys it. Cars don't qualify. For a period shorter than 12 months the limit is reduced in proportion, and companies in a group share one allowance.
This calculator reduces the limit by days: a 183-day period from 1 April to 30 September 2026 gets £501,369. It gives the allowance first to the spending where it is worth most: second-hand special rate items, then second-hand main-rate items, then new special rate items, then new main-rate items. GOV.UK: Annual Investment Allowance.
Is the writing-down allowance 18% or 14%?
For Corporation Tax the main pool writing-down allowance is 14% for accounting periods starting on or after 1 April 2026; it was 18% before. A period that spans 1 April 2026 uses a hybrid rate, worked out by days. The special rate pool stays at 6% a year.
GOV.UK's example is an accounting period from 1 January to 31 December 2026: 90 days at 18% and 275 days at 14% give a hybrid rate of 14.99%, rounded up to 2 decimal places. Writing-down allowances are also reduced for a period shorter than 12 months. GOV.UK: Calculate your hybrid rate of writing down allowance · GOV.UK: Rates and pools.
If a pool is £1,000 or less before the allowance, the company can write off the whole balance at once instead (the small pools allowance).
Can I claim capital allowances on a car?
Yes, but cars never get the Annual Investment Allowance or full expensing. A new, unused zero-emission car gets a 100% first-year allowance for spending up to 31 March 2027. Other cars go into the main pool if their CO2 emissions are 50 g/km or less, or into the special rate pool at 6% if higher.
Vans are not cars, so a van can get the Annual Investment Allowance, or full expensing if it is new. GOV.UK: Capital allowances for business cars. Our guide on buying an electric car through a limited company covers the benefit-in-kind side too.
What happens when the company sells an asset?
When a company sells an asset it claimed allowances on, the sale price (capped at what it cost) is deducted from its pool. If that takes the pool below zero, the difference is a balancing charge, added to taxable profits. If the asset had full expensing, the whole sale price is a balancing charge instead.
For an asset that had the 50% first-year allowance, half the sale price is a balancing charge and the rest comes off the special rate pool. GOV.UK: Capital allowances when you sell an asset · GOV.UK: Disposing of an asset if you claimed full expensing. Our guide explains how to claim capital allowances and balancing charges on the CT600.
What doesn't this calculator cover?
It covers one accounting period of a UK trading company. It doesn't work out the 40% first-year allowance for spending from 1 January 2026, assets bought to lease out, the structures and buildings allowance, property letting businesses, the period a company stops trading, purchases from connected people or assets with private use.
A company that can claim full expensing gets 100% instead of 40%, so the 40% allowance mainly helps businesses that can't, such as those buying assets to lease out. GOV.UK: 40% first-year allowance · GOV.UK: Structures and buildings allowance. The rules are in the Capital Allowances Act 2001, Part 2.
The tax saving shown is an illustration at 25% and 19%. To see the effect on the whole bill, use the Corporation Tax calculator. Not sure whether a purchase is an expense or a capital item? Read company equipment: expense or capital allowance? Selling property instead? Try the chargeable gains calculator.
Which rules does this calculator follow?
Every figure comes from the rules HMRC and Companies House publish on GOV.UK, and from the legislation behind them. The links below go to the pages we checked when we last reviewed this calculator, so you can read each rule in full and check that it applies to your company.
- GOV.UK: Annual Investment Allowance
- GOV.UK: Check if you can claim full expensing or 50% first-year allowances
- GOV.UK: Writing down allowances – rates and pools
- legislation.gov.uk: Capital Allowances Act 2001, Part 2 (plant and machinery)
Frequently asked questions
Can my company claim the full cost of a van?
Usually, yes. A van is not a car for capital allowances, so a company can deduct its whole cost in the year it buys it: through the £1,000,000 Annual Investment Allowance, or through full expensing if the van is new and unused. A second-hand van can use the Annual Investment Allowance. Any cost above the allowance that can't be full expensed goes into the main pool.
Should I claim full expensing or the Annual Investment Allowance?
Both give 100% relief on new main-rate plant and machinery. The difference shows when the asset is sold: with full expensing the whole sale price becomes a balancing charge, while with the Annual Investment Allowance it is deducted from the main pool. So this calculator uses the Annual Investment Allowance first and full expensing only on spending above the £1,000,000 limit.
What is the writing-down allowance rate in 2026?
For Corporation Tax the main pool rate is 14% for accounting periods starting on or after 1 April 2026, down from 18%. A period that spans 1 April 2026 uses a hybrid rate worked out by days, for example 14.99% for the calendar year 2026. The special rate pool rate is 6%. Writing-down allowances are reduced for a period shorter than 12 months.
Can a company claim capital allowances on an electric car?
Yes. A new and unused zero-emission car gets a 100% first-year allowance for spending up to 31 March 2027 for Corporation Tax. A second-hand electric car goes into the main pool at 14%. Cars never get the Annual Investment Allowance or full expensing. If an employee or director uses the car privately, there is also a benefit in kind to consider.
What is a balancing charge?
A balancing charge takes back allowances when a company sells an asset for more than the value left for tax. It is added to the company's taxable profits. It arises when sale proceeds take a pool below zero, or straight away on the whole sale price of an asset that had full expensing, or half the price of one that had the 50% first-year allowance.
Related free tools
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Last reviewed . This calculator gives general guidance, not tax advice.
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