Capital allowances: why the date of your next big purchase matters
The main-rate first-year allowance rises to 50% on 1 January 2027, and the writing-down allowance falls to 12% in April. Timing a purchase now changes how fast you get relief.
Most small businesses get full relief on equipment through the Annual Investment Allowance (AIA), which covers up to £1 million of qualifying spending a year. Companies can also claim full expensing on new main-rate plant and machinery. The Budget changes matter most for spending that falls outside those, such as purchases above the AIA, or by unincorporated businesses on assets that do not qualify for full expensing.
Show the data
| From 1 Jan 2026 | 40% |
|---|---|
| From 1 Jan 2027 | 50% |
The writing-down allowance falls again
The rate at which the main pool is written down fell from 18% to 14% in April 2026, and falls again to 12% from 1 April 2027 for companies and 6 April 2027 for income tax. Relief on spending that goes into the pool will come more slowly, so bigger first-year claims become more valuable.
Planning a purchase
- Check whether the spending is covered by the AIA or full expensing before relying on the first-year allowance.
- For spending above the AIA, a purchase on or after 1 January 2027 gets 50% relief in year one.
- Look at when the asset is contracted for and paid, as the rules on timing can be strict.
- Do not buy equipment for the tax relief alone: relief is a share of the cost, not all of it.
Sources
This insight is general information, not advice for your circumstances. Talk to us before acting on it.