UK Capital Allowances Calculator 2026/27

Worked scenarios

• £50k new P&M (company, full expensing)
  £50,000
  AIA £0 - FYA £50,000 - WDA £0
  CT saving £12,500 at 25%
• £50k P&M (sole trader, AIA)
  £50,000
  AIA £50,000 - FYA £0 - WDA £0
  CT saving £12,500 at 25%
• £100k new special-rate (company, 50% FYA + WDA)
  £53,000
  AIA £0 - FYA £50,000 - WDA £3,000
  CT saving £13,250 at 25%
• £40k new zero-emission car (100% FYA)
  £40,000
  AIA £0 - FYA £40,000 - WDA £0
  CT saving £10,000 at 25%
• £40k high-emission car (6% WDA)
  £2,400
  AIA £0 - FYA £0 - WDA £2,400
  CT saving £600 at 25%
• £1.5m new P&M (sole trader, AIA + 18% WDA)
  £1,090,000
  AIA £1,000,000 - FYA £0 - WDA £90,000
  CT saving £272,500 at 25%

Frequently asked questions

What is the Annual Investment Allowance (AIA) for 2026/27?

The AIA is £1,000,000 of qualifying expenditure per accounting period - permanent at this level since 1 April 2023. AIA gives 100% relief in the year of purchase on most plant and machinery, available to companies AND unincorporated businesses (sole traders, partnerships). Spend above £1m drops into the main or special-rate pool and is written down at 18% or 6% per year on a reducing-balance basis.

What is "full expensing" and who can claim it?

Full expensing gives a 100% First-Year Allowance on new and unused main-pool plant and machinery with no cap - so a company can deduct the full cost from taxable profits in year one. It is COMPANIES ONLY (limited companies subject to Corporation Tax), permanent since Autumn Statement 2023. Sole traders and partnerships cannot claim full expensing but still get the £1m AIA. Companies also get a separate 50% First-Year Allowance on new + unused special-rate assets (long-life assets, integral features, thermal insulation).

How do capital allowances work for cars?

Cars are outside the AIA entirely and follow their own CO2-based rules. New + unused zero-emission electric cars get a 100% FYA (companies AND sole traders). New + unused cars 1-50g/km CO2 go to the main pool at 18% WDA. Cars over 50g/km CO2 - including most petrol/diesel cars - go to the special-rate pool at 6% WDA. Second-hand cars never qualify for FYA regardless of emissions and are written down at the relevant pool rate.

Do sole traders get the same relief as companies?

Sole traders and partnerships get the £1m AIA on most plant and machinery, plus the 100% FYA on new zero-emission cars, plus normal WDA on the pool balance - so for spend under £1m on standard equipment the relief is identical to a company. The companies-only reliefs are 100% full expensing on new main-pool P&M (no cap) and the 50% FYA on new special-rate assets - these only matter for companies spending above £1m or buying integral features / long-life assets.

How do the main pool and special-rate pool work?

Expenditure not fully relieved in year one (e.g. AIA-exceeded amounts, cars, or second-hand assets) is added to a pool. The main pool covers most plant and machinery and is written down at 18% per year on a reducing balance. The special-rate pool covers long-life assets (25+ year economic life), integral features (heating, lighting, ventilation, lifts), thermal insulation, and high-CO2 cars - written down at 6% reducing balance. Each year the pool balance is reduced by the WDA claimed; balances under £1,000 can be written off as a "small pool" claim.

When can I claim Capital Allowances?

Allowances are claimed for the accounting period in which the asset is brought into use in the business (or contractually committed to under hire-purchase). For a CT600 corporate return, this is the company's accounting period; for a sole trader, it is the basis period that aligns with the personal tax year. Late claims can be made up to 12 months after the filing deadline. The calculator above models year-one relief only - subsequent-year WDA on the residual pool balance is straightforward 18% or 6% reducing balance until the pool is fully written down.