28/07/2026
Big changes to how you write off business assets are here for 2026. Are you timing your purchases right?
If your business regularly buys equipment, machinery, commercial vehicles, or office tech, the way you claim tax relief on those assets has shifted.
The government has overhauled Capital Allowances creating a "give and take" scenario that could directly impact your short-term cash flow and tax bills.
Here is what is changing and how to play it:
📉 The "Take": Writing Down Allowance (WDA) Cut
The main rate of WDA which is the percentage of tax relief you can claim each year on assets sitting in your main capital pool has been cut from 18% to 14%.
The impact: This means you'll receive tax relief on these assets at a slower rate, spreading the write-off over a longer period.
Who it affects: Anyone with large, historic "main pool" balances brought forward, or those buying assets (like second-hand equipment or certain cars) that don't qualify for instant write-offs.
To help cushion the blow, a permanent 40% FYA was launched on 1 January 2026 for brand-new main-rate plant and machinery.
The impact: You can instantly deduct 40% of the asset's cost in year one, with the remaining balance rolling into your main pool to be written down in future years.
The £1m Annual Investment Allowance (AIA): Still fully active! This remains the best first line of defense for small businesses, letting you write off 100% of qualifying purchases up to £1 million in the year of purchase.
Full Expensing: Remains permanently in place for eligible limited companies. Because this transition happens mid-year, if your business accounting period straddles the April 2026 threshold, you’ll need to use a "hybrid" tax rate (part 18%, part 14%) to calculate your relief.
Reach out to your accountant before making any major capital purchases this year to ensure you are maximizing the 100% AIA or utilizing the new 40% FYA effectively.
👇 Are you planning any big equipment or tech upgrades? Let's talk tax strategy in the comments!