Writing Down Allowances Changes Take Effect

Announced at the Autumn Budget 2025 on 26 November 2025, the Chancellor, Rachel Reeves, announced changes to the Writing Down Allowances (WDAs) for Main Pool assets.

This measure reduces the rate of WDAs on the main pool of plant and machinery from 18% to 14% per annum, effectively slowing the rate at which tax relief is given against the previously qualifying claim(s).  Importantly, no relief is lost.  The change does not affect the WDAs on special rate pool expenditure which is remains unchanged at 6% p.a. on a reducing balance basis.

The new 14% rate of WDAs is now effective from:

• 01 April 2026 (Corporation Tax)

• 06 April 2026 (Income Tax)

Usually capital allowances are claimed over multiple tax periods by reference to a per annum rate, allowing the taxpayer to ‘write off’ a certain percentage of their claim each year, known as the WDA.

The main rate of plant or machinery WDAs was 18% per annum on a reducing balance basis.  This rate applied to main pool expenditure, qualifying expenditure other than that specifically categorised as special rate (generally assets that qualify as Integral Features for property expenditure), and was reduced from 20% p.a. to 18% since April 2012 and having previously been at 25% up until April 2008.

These changes to WDAs are likely to only affect the largest Income Tax paying investors, mixed individual and corporate LLPs, or those with historic Capital Allowances pools.  As currently the 100% Annual Investment Allowance (AIA) allows investors to claim up to £1,000,000 in the year of expenditure, and the 100% Full Expensing first year allowance allows Corporation Tax payers to claim an unlimited amount of main pool expenditure in the year of expenditure.

There will be a hybrid rate that will have effect for businesses whose chargeable period spans 01 April (Corporation Tax) or 06 April (Income Tax).  The hybrid rate will be based on the proportion of the chargeable period falling before and after the change date.

For example, for Corporation Tax payer with an accounting period of 12 months ending on 30 September 2026:

6 / 12 x 18% for the period before the change date, plus

6 / 12 x 14% for the period after the change date =

yielding an effective rate of 16% for that initial transition period.

HM Revenue & Customs (HMRC) has updated their guidance which helpfully includes a calculator to work out the hybrid rate for accounting periods spanning the date of change.

Calculate your hybrid rate of writing down allowance

If you would like to discuss any property tax matters or specific queries relating to the above information, then please do contact the team on 0345 230 6450 or [email protected]. We look forward to speaking with you soon.