What Are Writing Down Allowances?

Writing down allowances (WDAs) are the annual capital allowances you claim on assets your business keeps using. Unlike the Annual Investment Allowance (AIA) which gives you 100% relief in the year of purchase, WDAs spread the relief over the asset's useful life.

Think of them as the tax equivalent of depreciation. But the rates are set by HMRC, not by your accounting policy. For the 2025/26 tax year, the main rate is 18% and the special rate is 6%.

If you run a limited company, a sole trade, or a partnership, you claim WDAs on your corporation tax return (CT600) or self assessment return (SA103 for sole traders, SA800 for partnerships).

Writing Down Allowance Rates for 2025/26

Two rates apply depending on the type of asset:

  • Main pool: 18% per year on a reducing balance basis. This covers most plant and machinery: office furniture, computers, vans, tools, and general equipment.
  • Special rate pool: 6% per year on a reducing balance basis. This covers integral features (lifts, air conditioning, electrical systems), long-life assets (expected life over 25 years), thermal insulation, and cars with CO2 emissions over 50g/km.

You calculate the WDA on the pool value at the end of your accounting period. The pool value is the total cost of all assets in that pool, minus any WDAs claimed in previous years.

Here is a worked example. A Manchester-based consultancy buys office furniture for £12,000 in June 2025. They do not use the AIA on this purchase. The main pool WDA for the year ending 31 March 2026 is £12,000 x 18% = £2,160. The pool carries forward at £9,840 for the next year.

If that same consultancy installs a new air conditioning system costing £28,000, that goes into the special rate pool. The WDA is £28,000 x 6% = £1,680. The pool carries forward at £26,320.

How Writing Down Allowances Interact With Other Capital Allowances

You do not have to claim WDAs on every asset. You can choose which assets to claim AIA on and which to leave in the pool for WDAs. This is a planning decision.

The AIA gives 100% relief up to £1,000,000 per year. Most businesses claim AIA on all qualifying assets in the year of purchase. But if your profits are low and you want to spread relief into future years, you can opt out of AIA and let the asset attract WDAs instead.

Full Expensing is another option for limited companies. It gives 100% relief on most main rate plant and machinery, and 50% on special rate assets. If you claim Full Expensing, the asset does not go into the pool. No WDAs apply to that asset in later years.

As ICAEW qualified accountants, we see many business owners assume they must claim the maximum relief immediately. That is not always the best move. If you are loss-making or expect higher profits in future years, deferring relief through WDAs can be more efficient.

Small Pools Allowance

If your main pool or special rate pool balance is £1,000 or less at the end of your accounting period, you can claim a small pools allowance. This writes off the entire balance in one go.

This is useful for businesses with old assets that have been depreciating for years. Instead of claiming £18 on a £100 pool balance, you claim the full £100.

The small pools allowance applies separately to the main pool and the special rate pool. You can claim it on one pool and not the other.

Assets That Do Not Qualify for WDAs

Some assets never go into a capital allowances pool. You cannot claim WDAs on:

  • Land and buildings (except integral features and thermal insulation)
  • Cars with CO2 emissions over 50g/km that cost more than the capital allowance cap (currently not capped for WDAs, but the special rate applies)
  • Assets used partly for private use (you restrict the claim to the business proportion)
  • Assets acquired before the business started trading
  • Structures and buildings (these attract Structures and Buildings Allowance at 3% per year instead)

If you buy a car for your limited company that emits 120g/km CO2, it goes into the special rate pool at 6%. A car emitting 48g/km qualifies for main pool treatment at 18% and also qualifies for Full Expensing if you buy it new.

Disposals and the Pool

When you sell or scrap an asset, you deduct the disposal proceeds (capped at original cost) from the pool balance. If the proceeds exceed the pool balance, you get a balancing charge. That is added to your taxable profits.

If the pool balance is negative after a disposal, the negative amount is treated as a balancing charge in full. You do not spread it.

Here is an example. A Bristol-based café sells a commercial oven for £3,500. The oven originally cost £8,000 and was in the main pool. The main pool balance before the sale is £12,000. After deducting £3,500, the pool balance is £8,500. The WDA for the year is £8,500 x 18% = £1,530.

If the pool balance was £2,000 and the oven sold for £3,500, the pool goes negative by £1,500. That £1,500 is a balancing charge added to taxable profits.

Planning Points for 2025/26

Consider these factors when deciding whether to claim AIA or leave assets in the pool for WDAs:

  • Profit levels. If your taxable profits are below £50,000, you pay 19% corporation tax. Claiming AIA now saves 19p per £1. If you expect profits above £250,000 next year (25% rate), deferring relief could save 25p per £1.
  • Loss positions. If you are loss-making, WDAs add to your pool and carry forward. AIA creates or increases a loss that can be carried forward or surrendered (group relief).
  • Cash flow. AIA gives immediate cash flow benefit. WDAs spread the benefit. If you need cash now, claim AIA.
  • Associated companies. If you have associated companies, the AIA threshold of £1,000,000 is divided between them. WDAs are not affected by associated company rules.

For a detailed breakdown of how capital allowances fit into your overall tax position, see our services page for corporation tax planning.

How to Claim Writing Down Allowances

You claim WDAs on your tax return. For limited companies, that is the CT600 corporation tax return. For sole traders and partnerships, it is the self assessment return (SA103 or SA800).

You need to keep a capital allowances schedule. This lists every asset, its cost, the date of purchase, the pool it goes into, and the WDA claimed each year. Most accounting software like Xero, FreeAgent, or Sage 50 can generate this automatically if you set up fixed asset registers correctly.

If you use cloud accounting software, check that your asset register is configured with the correct pool rates. We often see assets misclassified. A van used for deliveries goes into the main pool. A van with integral refrigeration equipment may have elements that go into the special rate pool.

Our fundamentals guide covers how to set up your asset register properly from day one.

Common Mistakes

Three errors we see regularly:

1. Claiming WDAs on assets that qualify for AIA without considering the interaction. You can claim AIA on most plant and machinery. If you forget to claim AIA and leave the asset in the pool, you get 18% relief instead of 100%. Check your return before filing.

2. Misclassifying assets between pools. Integral features like electrical systems and air conditioning must go into the special rate pool at 6%. Putting them in the main pool at 18% overclaims relief and HMRC will adjust it on enquiry.

3. Forgetting the small pools allowance. If your pool balance is under £1,000, claim the full write-off. Many businesses miss this and carry forward tiny balances for years.

If you are unsure about your capital allowances position, speak to an accountant. Our contact page connects you with our ICAEW qualified team.

Records You Need to Keep

HMRC can ask for evidence of your capital allowances claims up to 12 months after you file your return. Keep:

  • Invoices for every asset purchase
  • Dates of purchase and disposal
  • Description of each asset (enough to determine the correct pool)
  • Disposal proceeds (sales invoices, scrap notes)
  • Your capital allowances schedule showing the pool calculations

If you dispose of an asset privately (e.g. sell a company van to a director), you must record the market value as the disposal proceeds. Selling below market value creates a balancing charge that is too low, and HMRC will adjust it.

For more on record keeping requirements, see our bookkeeping and compliance blog.

Final Thoughts

Writing down allowance rates for 2025/26 are straightforward: 18% for main pool assets, 6% for special rate pool assets. The planning lies in deciding which assets to claim AIA on and which to leave in the pool.

If your business buys significant plant and machinery each year, the interaction between AIA, Full Expensing, and WDAs can save thousands in corporation tax. Get the classification right and the timing right.

Our calculators page includes a capital allowances estimator to help you model different scenarios.