Tax allowances for business investment
Making the most of your investment
Companies can qualify for a 100% first-year allowance, which effectively means full expensing for qualifying capital expenditure. There is also a 50% first-year allowance for special rate pool expenditure.
For unincorporated businesses, the high annual investment allowance limit of £1,000,000 for plant and machinery means that in most cases there is also full expensing of capital expenditure.
Where such generous reliefs are not available, it is important that you benefit from any other available tax relief for capital expenditure. Capital allowances are, however, no longer relevant for many sole traders and partnerships because the cash basis is the default method for calculating trading profit.
From 1 April 2026 (6 April 2026 for unincorporated businesses) the rate of writing-down allowance (WDA) for assets in the main pool has been reduced from 18% to 14%.
