Answers · UK 2025/26
What are UK capital allowances for business?
Capital allowances let UK businesses deduct the cost of plant, machinery and certain assets from taxable profits. Annual Investment Allowance (AIA) gives 100% relief on up to £1m/year of qualifying expenditure. Full Expensing gives 100% relief on main rate plant for companies (permanent from April 2023).
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UK capital allowances 2025/26 main schemes. Annual Investment Allowance (AIA): 100% first-year relief on most plant and machinery up to £1m per year per company group. Available to companies, sole traders and partnerships. Full Expensing: 100% first-year relief for companies on main rate plant and machinery — unlimited cap, permanent from April 2023. Special rate (50% first year) for assets in special rate pool (long-life assets, integral features). Writing Down Allowance (WDA): for spending above AIA or for assets not qualifying for full expensing — 18% main rate, 6% special rate, on reducing balance. Structures and Buildings Allowance (SBA): 3% straight-line over ~33 years on new-build commercial structures. Excluded: cars (separate rules — BIK regime), buildings (mostly), land. Disposals: balancing charges or balancing allowances on sale. R&D capital expenditure has its own scheme (100% relief). Practical advice: time purchases to maximise relief; companies benefit most from Full Expensing; unincorporated businesses rely on AIA. Record-keeping critical — track each asset through pool transfers.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.