Capital Allowances Calculator 2025/26
Calculate tax relief on business equipment purchases. See AIA, full expensing, and writing down allowances for plant, machinery, IT equipment, vehicles, and buildings. 2025/26 HMRC rates including Autumn Budget 2025 changes.
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How to Use This Calculator
Quick Allowance tab
The default tab. Enter the asset cost, select the asset type (plant/machinery, IT equipment, office furniture, vehicle, building, integral features, long-life asset, or thermal insulation), and specify whether the asset is new or used. The calculator determines the correct allowance method (AIA, full expensing, or WDA) and shows the year 1 deduction and tax saving. Expand "More options" for a custom corporation tax rate or short-life asset election.
Car Allowances tab
Specifically for company cars. Enter the car cost, whether it is fully electric, and the CO2 emissions (if not electric). The calculator shows the allowance rate based on the emission band, the annual deduction, and a comparison across all three emission bands so you can see the tax advantage of lower-emission vehicles.
Multi-Year Schedule tab
Shows a reducing balance schedule for assets in the writing down allowance pool. Enter the asset cost, choose main pool (18%) or special rate pool (6%), and select how many years to display. The schedule shows the opening balance, annual WDA deduction, tax saving, and closing balance for each year, plus cumulative totals.
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The Formula
Capital allowances use different methods depending on the asset and circumstances:
Year 1 deduction = 100% of cost (up to £1,000,000)
Tax saving = Cost × Corporation tax rate
Full Expensing (new main pool assets):
Year 1 deduction = 100% of cost (no annual limit)
Tax saving = Cost × Corporation tax rate
Writing Down Allowance (reducing balance):
Year N deduction = Pool balance × WDA rate
Main pool = 18% | Special rate = 6%
Closing balance = Opening balance − WDA deduction
Structures & Buildings Allowance:
Annual deduction = Cost × 3% (straight-line over 33.3 years)
The AIA covers new and used qualifying plant and machinery up to £1,000,000 per year. Full expensing is for new assets only and has no annual limit, but is only available to companies (not unincorporated businesses). Both give 100% relief in year 1.
When neither AIA nor full expensing applies (e.g., used assets exceeding the AIA limit), the asset enters the relevant WDA pool and is written down at 18% (main) or 6% (special rate) each year on a reducing balance basis.
Example
Sarah — IT Consultancy, Birmingham
Sarah's company buys £80,000 of new servers (plant/machinery) and a £45,000 electric car. Company profits are £200,000 (main rate, 25%).
Servers — AIA / Full Expensing
Electric Car — 100% FYA
Total Year 1 Relief
If Sarah had bought a petrol car with 120 g/km CO2 instead, it would enter the special rate pool (6% WDA). Year 1 deduction would be just £2,700 instead of £45,000 — a difference of £10,575 in tax saving.