How These Examples Work

This page is a set of worked capital allowances calculations, not a rulebook. Each example states the facts, runs the computation line by line, and ends with one sentence on why that route beats the alternatives. For the rules behind the numbers, see our guides to the Annual Investment Allowance, full expensing and writing down allowance rates, or the consolidated 2026/27 capital allowances guide.

Rates used throughout (2026/27): AIA 100% up to £1,000,000 (new and second-hand plant and machinery); full expensing 100% on new main-rate plant and 50% on new special-rate plant, companies only, uncapped; the 40% first-year allowance on new and unused main-rate plant bought on or after 1 January 2026 (FA 2026 s.29); writing down allowances at 14% (main pool) and 6% (special rate pool) for periods beginning on or after 1 April 2026 for companies or 6 April 2026 for income tax (FA 2026 s.28, previously 18% and 6%). None of AIA, full expensing or the 40% FYA applies to cars.[1]

Example 1: Sole Trader Claims AIA on a Second-Hand Van and Tools

Facts. A self-employed cabinet maker in Hull buys a second-hand van for £26,000 and tools for £3,400 in June 2026, all used wholly for the business. His 2026/27 trading profits before capital allowances are £58,000.

Computation.

  • Qualifying spend: £26,000 + £3,400 = £29,400 (vans and tools are plant and machinery; AIA covers second-hand assets)
  • AIA claim: 100% x £29,400 = £29,400 (well inside the £1,000,000 cap)
  • Taxable profits: £58,000 - £29,400 = £28,600
  • Income tax saved (2026/27, rUK bands): £21,670 relieved at 20% (£50,270 - £28,600) = £4,334, plus £7,730 relieved at 40% (£58,000 - £50,270) = £3,092, total £7,426
  • Class 4 NIC saved: £21,670 x 6% = £1,300.20, plus £7,730 x 2% = £154.60, total £1,454.80
  • Total saving: £8,880.80

Why this route. The van is second-hand, so full expensing and the 40% FYA are unavailable (and full expensing is companies-only anyway); AIA covers second-hand assets at 100%, so nothing falls into the 14% pool. More on the unincorporated treatment in our sole trader capital allowances guide.

Example 2: Company Mixing Full Expensing and AIA on One Purchase List

Facts. A Stoke-on-Trent manufacturing company, year ending 31 March 2027, buys: new production line machinery for £820,000, a second-hand packaging machine for £190,000, and new electrical rewiring with LED lighting (integral features, special rate) for £140,000. Total £1,150,000.

Computation (company).

  • New machinery £820,000: full expensing at 100% = £820,000 (new and unused main-rate plant, uncapped)
  • Second-hand packaging machine £190,000: AIA at 100% = £190,000 (full expensing excluded, second-hand)
  • Integral features £140,000: AIA at 100% = £140,000 (AIA used £330,000 of £1,000,000; AIA at 100% beats the 50% full expensing rate for new special-rate plant)
  • Total year-one relief: £1,150,000, nothing pooled

The same list for a partnership (no full expensing). Allocate the £1,000,000 AIA where it works hardest: integral features £140,000 (otherwise only 6%), the second-hand machine £190,000 (otherwise 14%, no FYA available), and £670,000 of the new machinery. The remaining £150,000 of new machinery gets the 40% FYA = £60,000, and the £90,000 balance enters the main pool: £90,000 x 14% = £12,600 (2026/27). Year-one relief: £1,000,000 + £60,000 + £12,600 = £1,072,600, carrying forward £77,400.

Why this route. Full expensing is uncapped, so a company spends its AIA only on what full expensing cannot touch (second-hand and, at the better 100% rate, special-rate plant); an unincorporated business points AIA at the worst-rate assets first and lets the 40% FYA mop up new main-rate spend above the cap.

Example 3: WDA in a Period Straddling the April 2026 Rate Change

Facts. A Norwich distribution company draws accounts for the calendar year ending 31 December 2026. Its main pool stands at £45,000 with no additions or disposals in the year.

Computation.

  • Days before 1 April 2026: 90; days on or after: 275 (of 365)
  • Hybrid main rate: (90/365 x 18%) + (275/365 x 14%) = 4.44% + 10.55% = 14.99% (rounded)
  • WDA: £45,000 x 14.99% = £6,745.50
  • Pool carried forward: £45,000 - £6,745.50 = £38,254.50

Why this route. A straddling period never switches rate mid-year: FA 2026 s.28 prescribes one time-apportioned rate for the whole period, and sole traders and partnerships run the same mechanic around 6 April 2026.[2] The full straddle rules are in our writing down allowance rates guide.

Example 4: Three Cars, Three CO2 Bands

Facts. A Reading consultancy, year ending 31 March 2027, buys three cars: a new electric car (0g/km) for £42,000, a new plug-in hybrid (44g/km) for £30,000, and a petrol SUV (158g/km) for £38,000. Cars get no AIA, no full expensing and no 40% FYA.[3]

Computation (year one).

  • Electric car, 0g/km, new: 100% first-year allowance = £42,000
  • Hybrid, 44g/km (50g/km or less): main pool, £30,000 x 14% = £4,200, carrying forward £25,800
  • SUV, 158g/km (over 50g/km): special rate pool, £38,000 x 6% = £2,280, carrying forward £35,720
  • Total year-one relief: £48,480 on £110,000 of spend

Why this route. Emissions are the only lever on cars: the same money in the 158g/km SUV takes decades at 6% to relieve what the electric car relieved in year one. Note that a double cab pick-up bought on or after 1 April 2025 (companies) or 6 April 2025 (income tax) is treated as a car, so a high-emission pick-up lands in the 6% special rate pool with no AIA, unlike a van. Details in our writing down allowances on cars guide.

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Example 5: Private-Use Apportionment on a Sole Trader's Van

Facts. An Ipswich mobile hairdresser buys a van for £24,000 in 2026/27 and her mileage log shows 70% business use, 30% private.

Computation.

  • AIA before restriction: 100% x £24,000 = £24,000
  • Business proportion: £24,000 x 70% = £16,800 claimed
  • The van sits in a single asset pool, so any later writing down allowances and the balancing adjustment on sale are apportioned at the business percentage for each year too

Why this route. Private use restricts the allowance, not the asset's eligibility: claiming the full £24,000 is the mistake HMRC adjusts on enquiry, and the mileage log is what defends the 70%. (Private-use restrictions apply to sole traders and partners; an employee's or director's private use of a company asset is a benefit-in-kind issue instead, not a capital allowances restriction.)

Example 6: Balancing Charge on a Disposal

Facts. A Plymouth signage company sells a CNC router for £9,000. It cost £15,000 three years ago and AIA was claimed in full at purchase. The main pool stands at £5,200 before the sale, and the year (ending 31 March 2027) has no additions.

Computation.

  • Disposal value: £9,000 (below the £15,000 original cost, so the cap does not bite)
  • Pool: £5,200 - £9,000 = -£3,800
  • Balancing charge: £3,800 added to taxable profits in full this period; the pool carries forward at nil

Why this route. There is no choice here, only a trap: 100% relief up front means the pool holds nothing for the asset, so healthy sale proceeds claw relief back, and a sale to a connected person (a company van to its director, say) must go through at market value or HMRC adjusts the charge.

Example 7: Small Pools Write-Off

Facts. A Carlisle bookkeeping practice's main pool stands at £1,120 at the start of its year ending 31 March 2027. It buys nothing and scraps an old printer for £280.

Computation.

  • Pool after disposal: £1,120 - £280 = £840
  • £840 is £1,000 or less, so the small pools allowance writes off the whole £840 this year instead of a £117.60 WDA (14%)
  • Pool carried forward: nil

Why this route. At 14% reducing balance a £840 pool would drip relief for a decade; the small pools allowance (limit £1,000, time-apportioned for short or long periods, applied per pool) clears it in one line.[4]

Putting It on the Return

Companies claim in the capital allowances section of the CT600; sole traders and partnerships claim on the SA103 or SA800. Keep the asset schedule behind every figure above: cost, date, pool, allowance claimed, balance carried forward. If you would like your computation checked before filing, get in touch.

Sources

  1. Claim capital allowances. GOV.UK. gov.uk/capital-allowances. Retrieved 2026-08-25.
  2. Finance Act 2026, section 28 (writing-down allowances: reduction of main rate, amending Capital Allowances Act 2001 section 56). legislation.gov.uk. legislation.gov.uk/ukpga/2026/11/section/28. Retrieved 2026-08-25.
  3. Claim capital allowances: business cars. GOV.UK. gov.uk/capital-allowances/business-cars. Retrieved 2026-08-25.
  4. Work out your capital allowances: rates and pools. GOV.UK. gov.uk/work-out-capital-allowances/rates-and-pools. Retrieved 2026-08-25.