Capital Allowances Calculator

Capital allowances let UK businesses deduct the cost of qualifying capital assets from taxable profits over time, or in full in the year of purchase. The main routes are: Annual Investment Allowance (AIA) offering 100% relief on the first £1,000,000 of qualifying plant and machinery; Full Expensing at 100% for new (not second-hand) main-rate plant and machinery purchased by companies; and the 50% First Year Allowance for new special-rate assets like long-life assets and integral features.

Assets that don't qualify for first-year relief enter writing down allowance (WDA) pools. The main pool covers most plant and machinery at 18% per year on a reducing-balance basis. The special rate pool—covering integral features, long-life assets, and thermal insulation—writes down at 6% per year. Cars have specific rules: zero-emission cars get 100% first-year allowance, cars with CO₂ emissions up to 50g/km enter the main pool, and higher-emission cars enter the special rate pool.

Balancing allowances or charges arise when you dispose of an asset. If the disposal value is less than the pool balance, the shortfall is claimed as a balancing allowance. If the disposal value exceeds the pool balance, the excess is a balancing charge added to taxable profits. Accurate tracking of each pool's written-down value is essential for correct annual claims.