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Van & Equipment Capital Allowance Calculator
Buying a van, car, or piece of equipment for the business? The tax relief varies enormously depending on what you buy and how you buy it. A £40,000 van can be written off in full in year one, while a £40,000 high-emission car gets just 6% a year. This calculator applies the FA 2026 rules (14% main-rate writing down allowance, the new 40% first-year allowance for companies) and shows your year-one and four-year tax saving at your marginal rate.
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Buying a van, car, or piece of equipment for the business? The tax relief varies enormously depending on what you buy and how you buy it. A £40,000 van can be written off in full in year one, while a £40,000 high-emission car gets just 6% a year. This calculator applies the FA 2026 rules (14% main-rate writing down allowance, the new 40% first-year allowance for companies) and shows your year-one and four-year tax saving at your marginal rate.
Only used when the asset is a car. Vans and equipment ignore this.
The rate the allowance saves tax at. Companies in the £50k to £250k band save at an effective 26.5% on each marginal pound.
Sole traders and partnerships must restrict the claim for private use. Companies claim in full; a director's private use is taxed as a benefit in kind instead.
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How capital allowances work from April 2026
Capital allowances are how the tax system gives you relief for money spent on assets. Which allowance applies depends on the asset. The Annual Investment Allowance (AIA) gives 100% relief in year one on up to £1 million of qualifying spend per year, and it covers vans, machinery, tools, and computers, whether new or second-hand. Cars are specifically excluded from the AIA by statute.
Finance Act 2026 changed two things from April 2026. The main-rate writing down allowance fell from 18% to 14% a year (FA 2026 s.28), so relief through the main pool is now noticeably slower. In exchange, companies (not sole traders) get a new 40% first-year allowance on new, unused main-rate plant and machinery (FA 2026 s.29). In practice the AIA still beats the 40% FYA whenever you have AIA headroom, so the FYA mainly matters for companies spending over £1 million a year.
Cars follow their own CO2-based rules. A new, unused zero-emission car qualifies for a 100% first-year allowance. Cars with emissions of 1 to 50 g/km (and used electric cars) go into the main pool at 14% a year. Cars above 50 g/km go into the special rate pool at just 6% a year, which means less than a quarter of the cost is relieved even after four years.
Worked example 1: a limited company paying the 26.5% marginal rate buys a new van for £40,000. The AIA relieves the full £40,000 in year one, a tax saving of £10,600. Via the 40% FYA the year-one allowance would be only £16,000 (saving £4,240), and via the 14% writing down allowance just £5,600 (saving £1,484). Same van, same cost, a £9,116 difference in year-one tax depending on the route.
Worked example 2: a higher-rate sole trader buys a £30,000 petrol car with 120 g/km emissions, used 80% for business. It sits in the special rate pool at 6%: the year-one allowance is £1,800, restricted to £1,440 for business use, saving £605 at 42%. Over four years the cumulative saving is only about £2,210. Had they bought a new electric car for the same money, the 100% first-year allowance would save £10,080 in year one, more than four times the petrol car's four-year total.
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