Buy equipment for your business and you can usually claim tax relief on the cost. Enter your spend and tax rate to see the relief under the Annual Investment Allowance or writing down allowance.
Asset cost · method · tax rate
Capital allowances let businesses deduct the cost of equipment, machinery, vehicles and other assets from their taxable profit. You can't deduct the whole cost as a normal expense, but you can claim it through capital allowances — often all at once. The two main routes are the Annual Investment Allowance (AIA) and the Writing Down Allowance (WDA).
| Allowance | Relief 2026/27 |
|---|---|
| Annual Investment Allowance | 100% up to £1,000,000 |
| Main pool WDA | 18% a year (reducing balance) |
| Special rate pool WDA | 6% a year (reducing balance) |
The AIA gives 100% tax relief on the cost of qualifying plant and machinery in the year you buy it, up to £1 million a year. So a £20,000 machine reduces taxable profit by £20,000 immediately — worth £5,000 to a company paying 25% Corporation Tax. It covers most tools, equipment, computers, vans and commercial vehicles, but not cars.
For spending above the AIA, or for cars and special-rate assets, you use the WDA — 18% a year on the main pool, or 6% on the special rate pool, on a reducing balance. Relief is slower but continues year after year. For sole traders, see how this fits with the self-employed tax calculator.
The AIA for 2026/27 is £1,000,000 — giving 100% tax relief on qualifying plant and machinery in the year of purchase.
It's the allowance claimed × your tax rate. £20,000 of AIA saves £5,000 at 25% Corporation Tax, or £8,000 for a 40% higher-rate sole trader.
A WDA deducts a percentage each year on a reducing balance — 18% main pool, 6% special rate — for spending above the AIA, cars, and longer-life assets.
Cars can't use the AIA — you claim a WDA by CO2 (18% or 6%), with 100% first-year allowances for new electric cars.
