Capital allowances on plant and machinery

Writing-down allowances

Writing-down allowances (WDA) are annual allowances that you can claim to reduce or 'write down' any remaining balance of capital expenditure on plant and machinery that you have not already claimed a capital allowance for, referred to as a 'pool' of 'unrelieved' expenditure.

You apply WDA to the sum of the following:

  • any residual capital expenditure balances you have carried forward from previous years
  • added to the balance of any new capital expenditure in the accounting period after you have claimed any other more advantageous allowances (but not including the balance of any expenditure you have already claimed a first-year allowance for - this goes into the pool for a following year)
  • less any claim for AIA allowance on any new capital expenditure in the accounting period
  • less the proceeds of equipment you have disposed of or sold

How much you can claim

There are two rates of WDA for plant and machinery - the rate for the main pool, 18 per cent, and the rate for the special rate pool, currently 8 per cent.

These rates apply to the calculation of capital allowances for accounting periods:

  • ending on or after 1 April 2012 for businesses within the charge to Corporation Tax
  • on or after 6 April 2012 for businesses within the charge to Income Tax

For previous rates see the table below. Because the rate changes have effect from a fixed date, those businesses with an accounting period that spanned the date of the change will have a hybrid rate for the whole of that transitional period. If your accounting period spanned a date when the rate changed, see the pages in this guide on calculating writing-down allowances if your accounting period spans a rate change.

With the exception of short-life or part-private use assets (see later on this page for more on these), you can allocate unrelieved expenditure on your assets into two pools for the purposes of calculating your writing-down allowances.

Changes in the writing-down allowance (WDA)

Asset pool WDA before 1/6 April 2008 WDA from 1/6 April 2008 WDA from 1/6 April 2012
special rate pool The special rate pool was only introduced on 1/6 April 2008, so there was no rate applicable to it before that date. However, expenditure on long-life assets (now a type of 'special rate' expenditure) incurred before 1/6 April 2008 qualified at 6%. 10% 8%
main pool 25% 20% 18%


As the table above shows, the writing-down allowance rates changed from 1 April 2008 and again from 1 April 2012 for Corporation Tax and from 6 April for Income Tax. If your accounting period spans a date when the rate changes, see the pages in this guide on calculating writing-down allowances if your accounting period spans a rate change and calculating allowances for accounting periods shorter or longer than 12 months.

Residual expenditure that goes into the special rate pool includes qualifying capital expenditure on:

  • some cars - see the page in this guide on capital allowances on cars
  • plant and machinery that counts as thermal insulation or integral features in buildings - see our guide below
  • long-life assets - any equipment with an expected useful economic life of over 25 years
  • cushion gas

Capital allowances relating to buildings and renovation.

Residual expenditure on everything else goes into the main pool, unless you make a short-life asset election or it is an asset with non-business use, in which case it goes into a single asset pool (see below). Note that the writing-down allowance that you claim is a percentage of the residual balance in a pool and not a percentage of the original amount of expenditure on an asset.

Once you have claimed the writing-down allowance on a pool, you reduce or write down the residual balance in that pool by the amount of your writing-down allowance claim and carry the new lower figure forward to the next accounting period.

The examples below are for 2011-12. If your accounts span a date of change of the maximum amount of AIA special transitional rules apply see the link below.

If the annual investment allowance changed during your accounting period.

Example 1: If you are self-employed, pay Income Tax and spent £106,000 in the 2011-12 tax year on office furniture and machinery, you could have claimed the AIA of £100,000, and also claim a 20 per cent WDA on the balance of £6000 ( WDA = £6,000 X 20% =£1,200) - leaving £4,800 to carry forward to the period after that.

Example 2: If you are self-employed and preparing accounts for the period 6 April 2011 to 5 April 2012 and you spent £110,000 on new electrical and heating systems for your shop, you could claim £100,000 as an AIA, leaving a balance of £10,000. The £10,000 could be allocated to the special rate pool and you could claim a WDA of 10 per cent of this figure, or £1,000, leaving a balance of £9,000 to be carried forward to the next accounting period.

Example 3: Where relevant, you can choose to allocate expenditure to the most advantageous allowances that are available. You are self-employed, preparing accounts for the period 6 April 2011 to 5 April 2012, and in that period you spent £60,000 on new electrical and heating systems for your business and £70,000 on general equipment and a new van. You can allocate your £100,000 AIA first to the £60,000 spent on integral features, since these would otherwise only attract the 10 per cent WDA. This leaves an AIA of £40,000 that you can allocate to your £70,000 general equipment expenditure leaving a balance of expenditure of £30,000. Finally, you can allocate the £30,000 expenditure to the main pool and claim a WDA of 20 per cent of £30,000 - £6,000 - leaving £24,000 to be carried forward to the next accounting period.

Small Pools Allowance - for residual balances of £1,000 or less

If in either the main or special rate pool the remaining balance is £1,000 or less after you have carried out the steps below, then instead of claiming a writing-down allowance you can claim an allowance (sometimes called the Small Pools Allowance) for the whole amount remaining in that pool.

Steps to work out if you can claim the Small Pools Allowance for a given pool:

  • start with the unrelieved capital expenditure carried forward from the previous accounting period
  • add any new capital expenditure on which you have not claimed a first-year allowance in that period and which is not otherwise covered by an annual investment allowance claim
  • add the balance of any expenditure in a previous period on which a first-year allowance (such as the temporary 40 per cent first year allowance) was claimed which you have not already brought into the pool
  • deduct any proceeds for items that you have sold or disposed of from that pool in that period
  • if the residual balance is £1,000 or less you can claim the Small Pools Allowance on the whole balance

The main or special rate pool will continue to exist, but the balance carried forward to the next year will be nil. For more information, see the page in this guide on the Small Pools Allowance.

Assets used partly for non-business use - special rules

You do not add expenditure on assets that are used partly for non-business into either the main or special rate pools. Instead - to enable you to work out the allowances that you can claim for your business use - you calculate writing-down allowance for each asset individually in a single asset pool:

  • use the writing-down rate for the special rate pool, 8 per cent, for assets listed above in the explanation of the special rate pool
  • use the rate for the main pool, 18 per cent for everything else

Remember that the amount of writing-down allowance will be reduced in proportion to your business use.

Short-life assets and writing-down allowances

You do not add the expenditure on assets that you have elected to treat as short-life assets into the main or special rate pools mentioned above. Instead, you need to calculate the writing-down allowance for each short-life asset individually in a single asset pool, using the writing-down rate for the main pool, 18 per cent, because you cannot make a short-life asset election for special rate expenditure. For further guidance, see the page in this guide on short-life assets and capital allowances.

Find guidance on the rules for writing-down allowances on the HM Revenue & Customs (HMRC) website.

Developed with:

HM Revenue & Customs