Capital Allowances AIA & Full Expensing Calculator
Estimate UK capital allowances tax relief for 2026/27, including the £1m Annual Investment Allowance, 14% main-pool WDA, 6% special-rate WDA, 40% First-Year Allowance and qualifying company Full Expensing.
Capital Allowance Tax Saving Estimator
Estimate first-year tax relief on qualifying business asset purchases; the displayed tax saving depends on the selected illustrative tax rate
Capital Allowance Result:
UK Capital Allowances Scheme Comparison 2026/27
| Scheme | Relief Rate | Monetary Cap | Who Can Claim |
|---|---|---|---|
| Annual Investment Allowance (AIA) | 100% Year 1 | £1,000,000 subject to AIA rules | Companies, sole traders and partnerships, subject to eligibility |
| Full Expensing | 100% Year 1 | No monetary cap | Qualifying companies; new and unused main-rate plant and machinery |
| 40% First-Year Allowance | 40% Year 1 | No general monetary cap | Businesses within Corporation Tax or Income Tax meeting the conditions |
| 50% Special Rate FYA | 50% Year 1 | No monetary cap | Qualifying companies; new and unused special-rate plant and machinery |
| Main Pool WDA | 14% / year | Reducing balance | Qualifying businesses |
| Special Rate Pool WDA | 6% / year | Reducing balance | Qualifying businesses |
How UK Capital Allowances Work in 2026/27
Capital allowances are tax reliefs for qualifying business expenditure on plant and machinery. The relief reduces taxable profits rather than reimbursing the purchase price. The correct allowance depends on the asset, whether it is new or used, the type of taxpayer, the accounting or chargeable period, and whether another first-year allowance or the Annual Investment Allowance is available.
Annual Investment Allowance
The AIA is £1,000,000 for qualifying expenditure. It can provide 100% relief in the period of purchase, but business cars are excluded and there are specific restrictions for connected or related businesses. The maximum amount can also be proportionately adjusted where the accounting or chargeable period is shorter than 12 months.
Main-rate plant and machinery
For chargeable periods beginning on or after 1 April 2026 for Corporation Tax or 6 April 2026 for Income Tax, the main writing-down allowance rate is 14%, replacing the previous 18% rate. Where an accounting period straddles the rate-change date, HMRC's hybrid-rate rules may apply.
40% First-Year Allowance
From 1 January 2026, qualifying new and unused main-rate plant and machinery can potentially receive a permanent 40% first-year allowance. This relief is available to businesses within Corporation Tax or Income Tax and is separate from Full Expensing.
Full Expensing and 50% special-rate allowance
Full Expensing allows qualifying companies to deduct 100% of qualifying new and unused main-rate plant and machinery expenditure. The 50% special-rate first-year allowance is also company-only and covers qualifying new and unused special-rate assets such as integral features and solar panels. The same expenditure cannot receive two overlapping allowances.
Business cars
Cars do not qualify for AIA, Full Expensing, the 50% special-rate FYA or the 40% FYA. Instead, cars normally receive writing-down allowances, although qualifying new electric or zero-emission cars can receive a 100% first-year allowance while that relief remains available.
Disposals and balancing charges
Selling an asset on which capital allowances were claimed may create a balancing charge or other balancing adjustment. The result depends on the allowance claimed, disposal value and relevant pool. The disposal treatment should therefore be calculated separately rather than assuming that every sale automatically adds the entire sale proceeds to taxable profits.
Frequently Asked Questions (FAQs)
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