That single change has caused a lot of confusion, and a fair amount of it online is simply wrong. This guide gives you the current WDA rates, shows which assets fall into which pool, and walks through what the cut actually costs an investor in real money. It also covers the blended rate for accounting periods that straddle the change, the new 40% first year allowance, what landlords can and cannot claim, and what happens to your pools when you sell.
Key Takeaways
What Goes in the Main Pool & What Goes in the Special Rate Pool Under WDA?
Every asset you claim on lives in a pool, and the pool sets the rate. There are three of them, and you work each one out on its own.
Pool Type | What goes in it | Rate |
|---|---|---|
Main Pool | Most of your general kit: equipment, tools, machinery, and lower emission cars | 14% |
Special Rate Pool | The stuff built into the building: wiring and lighting, hot and cold water, heating, air conditioning, lifts and escalators, external solar shading. Also long life assets, solar panels, thermal insulation, and higher emission cars | 6% |
Single Asset Pool | Short life assets you've chosen to track on their own, and anything a sole trader or partner also uses privately | Main or special rate, depending on the item |
The thing that trips up property investors is that a single refurbishment almost never sits in one pool. Refit an office and you're creating main pool spend on the loose equipment and special rate spend on the wiring, heating and air con, all in the same job. Splitting that out properly at the point of claim really matters. At 14% and 6%, the two pools write down at very different speeds, so if something lands in the wrong one, you're stuck collecting the relief at the wrong WDA rate for years.
What Changed to the Writing Down Allowance in April 2026?
What does the cut actually do? It doesn't take any relief away. You still claim the full cost of your assets eventually, you just get it more slowly. A smaller amount comes off your profit each year, so you pay a bit more tax in the early years and less later on. The total is the same, the timing is different.
Most businesses won't feel this at all. That's because two other reliefs already let you claim the full cost in year one: the £1,000,000 Annual Investment Allowance (open to everyone) and full expensing (companies only). If your spending fits inside those, the 14% rate never comes into play.
It only matters when writing down allowances are your only option. That usually means one of two things: you're carrying a big pool of older assets still being written down, or you've spent more than £1,000,000 in a year. If that's you, the slower rate has a real cost, and it's worth working out the numbers before your accounting year ends.
Three things to take away about the writing down allowance:
- Relief is slower, not smaller. 14% WDA spreads the same total over more years than 18% did.
- Big older pools lose the most. The lower rate applies to everything in the pool, not just new purchases.
- Getting the right pool matters more now. The gap between the fast reliefs and the slow 14% WDA is wider, so putting an asset in the wrong pool costs you more than before.
A Simple WDA Worked Example
You've got £100,000 of older assets in your main pool.
- Last year, at 18%: you claimed £18,000.
- This year, at 14%: you claim £14,000.
So £4,000 less relief this year, meaning a bit more tax now. You haven't lost it, it just comes through over more years (point one). And because it's a big existing pool, the whole £100,000 feels the lower rate, not just new purchases (point two).
Now the pool point. If £14,000 of relief was sitting in the wrong pool, the special rate pool at 6% instead of the main pool at 14%, you'd only get £840 this year instead of £1,960 on that slice. Less than half. That's why putting each asset in the right pool matters more now than it used to (point three).
How a Writing Down Allowance Is Calculated
The method is called reducing balance, and it works exactly as it sounds. You take the rate off the pool balance, claim that amount, and carry the rest forward. Next year you apply the rate again to the smaller balance. The claim shrinks a little each year because the balance does.
Worked Example
A property investment company has a main pool balance of £450,000 for the year ending 31 March 2027. It claims 14% of £450,000, which is £63,000 and the pool carries forward at £387,000. At the old 18% rate, the WDA would have been £81,000 and the pool would have carried forward at £369,000, leaving a larger opening balance for future writing down allowances. At 25% Corporation Tax that £63,000 WDA claim is worth £15,750. Under the old 18% rate the claim would have been £81,000, worth £20,250. So the April 2026 cut costs this investor £4,500 of relief in year one, on this one pool alone.
These figures are illustrative. Your own calculation depends on your specific facts.
What Rate Applies If My Accounting Period Straddles April 2026?
If your accounting period runs across the change date, you do not use one rate or the other. You blend them, weighting each by the number of days that fall on either side.
Worked Example
A company that pays Corporation Tax has an accounting period beginning on 1 January 2026 and ending on 31 December 2026.
In that accounting period, there are:
- 365 total days
- 90 days before 1 April 2026 and
- 275 days after 1 April 2026, including 1 April 2026.
To work out the hybrid rate, the company should:
- divide 90 by 365, then multiply the result by 18
- divide 275 by 365, then multiply the result by 14
- add the two results together and
- round up to 2 decimal places.
The calculation is: (90 ÷ 365 × 18%) + (275 ÷ 365 × 14%) = 14.99%
So, for this accounting period, the company’s hybrid writing down allowance rate is 14.99%. For a 12-month accounting period, applying that rate to a £300,000 main pool would give:
- £300,000 × 14.99% = £44,970
The exact hybrid rate depends on the actual day count in your accounting period, so different year ends can produce different rates. HMRC’s GOV.UK calculator can be used to work out the hybrid writing down allowance rate. If your accounting period is more or less than 12 months, further calculations may be needed to adjust the amount of writing down allowance you can claim.
How Does the New 40% First Year Allowance Affect My Claim?
This is the change most people miss, and it is the more useful one. From 1 January 2026, qualifying spending on new and unused main rate plant and machinery attracts a 40% first year allowance. You claim 40% of the cost straight away, and the remaining 60% drops into the main pool to write down at 14%.
For property businesses, the good news is that the relief can apply quite widely. This allowance is open to everyone, including individual landlords and property partnerships, and it works even where you lease the asset out, which company only full expensing does not. The limits are worth knowing: it does not cover cars, it does not cover second hand or used assets, and it does not cover assets bought to lease overseas. It also only touches new spending, so it does nothing for the pool balances you already carry forward.
The order you claim in decides how fast your money comes back. Work down this list:
Your Situation | Best Allowance to Use | Rate |
|---|---|---|
Qualifying spend within the annual cap | Annual Investment Allowance | 100%, up to £1,000,000 |
A company, new main rate plant, cap already used | Full expensing | 100% in year one |
Any business, new main rate plant, cap already used | 40% first year allowance | 40% now, 60% to the main pool at 14% |
Used assets, or anything above the cap | Writing down allowance | 14% main pool, 6% special rate |
Can Landlords Claim Writing Down Allowances?
1. Residential buy-to-let landlords
No. Residential buy-to-let landlords cannot claim writing down allowances on plant or machinery for use in a dwelling-house. This is a statutory rule, although mixed-use or apportionment issues can arise in some cases.
Instead, landlords usually claim Replacement of Domestic Items Relief, which gives tax relief when replacing furniture or appliances used in the property. It does not apply to the first purchase of those items.
2. Commercial property landlords
Yes. Landlords of commercial properties such as offices, shops, warehouses, hotels and care homes can usually claim capital allowances on qualifying plant and machinery.
This can include:
- Writing Down Allowances (WDA)
- Annual Investment Allowance (AIA)
- Full expensing (for companies only, on qualifying new assets)
3. HMO landlords
Partly. HMOs sit in a grey area.
Items used in communal areas (such as hallways, shared boilers, fire alarm systems and lighting) may qualify for capital allowances.
Items used inside individual rented rooms usually do not qualify if they are treated as part of a dwelling.
In practice, the key issue is whether the asset serves the whole property or just private living space.
4. Corporate landlords
Yes. Companies can claim capital allowances in the same way as other businesses.
They can also benefit from:
- Annual Investment Allowance (AIA)
- Full expensing on qualifying new plant and machinery (main rate assets).
This makes company ownership more flexible for claiming capital allowances compared to individual landlords.
What Happens to Your Capital Allowances When You Sell Fixtures?
When you claim capital allowances on fixtures (like wiring, lighting, heating), the cost is not tracked separately for each item every year. Instead, everything goes into a capital allowances pool and you claim relief gradually through writing down allowances.
The key tax point happens when you sell the asset or the property containing those fixtures.
What Happens on Sale
The disposal value is broadly the amount agreed, but it cannot exceed the tax written down value rules or original qualifying expenditure limits.
This disposal value is then deducted from the capital allowances pool.
Balancing charge or balancing allowance
After the disposal value is added:
- If the disposal value is more than the remaining pool balance, the pool is reduced to nil and the excess becomes a balancing charge. This is added to taxable profits and effectively claws back earlier tax relief.
- If the disposal leaves a positive balance in the pool when the qualifying activity ends, a balancing allowance may arise. This gives additional tax relief for the unclaimed amount.
For ongoing businesses, balancing allowances on main and special rate pools usually only arise when the activity stops completely.
Why the section 198 election matters
On a commercial property sale, the section 198 election is crucial.
It allows the buyer and seller to agree how much of the purchase price relates to fixtures. That agreed figure determines:
- what the seller brings into the pool as disposal value
- what the buyer can claim as qualifying expenditure in the future
Without a valid election, the parties may lose tax certainty, and the buyer may be unable to claim the full allowances expected, so specialist valuation and compliance checks are needed.
Worked Example – Capital Allowances on Sale of Fixtures
A section 198 election agrees £50,000 as the fixtures value.
Step 1: Pool position before sale
Capital allowances pool (tax written down value) before sale | £40,000 |
Step 2: Disposal value brought into pool
Section 198 agreed fixtures value (disposal value) | £50,000 |
Step 3: Compare pool vs disposal value
Pool balance before disposal | £40,000 |
Less: disposal value | £50,000 |
Difference | £10,000 excess |
Step 4: HMRC outcome
Pool after disposal | £0 | Pool cannot go negative, it is reduced to nil |
Balancing charge | £10,000 | Excess disposal value is added to taxable profits |
Step 5: Buyer position (for completeness)
Buyer qualifying expenditure on fixtures | £50,000 |
Frequently Asked Questions
No. Depreciation is an accounting figure and isn't deductible for tax. The writing down allowance is the tax version, set by HMRC's rates rather than your accounts. In the tax computation you add depreciation back and claim capital allowances instead. The two rarely match, because 14% or 6% almost never lines up with the depreciation rate your accountant uses.
Yes, on the qualifying fixtures, but with conditions. Allowances on fixtures in a second-hand . building usually depend on a past owner having pooled them and a valid section 198 election fixing their value. The 40% first year allowance is off the table for second-hand assets, but writing down allowances on the inherited fixtures can still flow, so check the contract and the election before you complete.
The s198 election must be submitted to HMRC within two years of the completion date. Miss that window and the buyer's qualifying expenditure is permanently nil. Raise the election at heads of terms, not after exchange
Yes, and this is the part investors underestimate. The 14% rate applies to your whole main pool balance in any period starting on or after the change date, not just to new purchases. There's no split by when each asset was bought. A large brought forward balance simply writes down more slowly than before, which is why investors with big historic pools feel the change most.
WORK WITH UK PROPERTY ACCOUNTANTS
UK Property Accountants, Central London, serving clients across the UK and internationally. We find and classify your qualifying spend, pool it at the correct rate, apply the AIA, full expensing and 40% first year allowance in the right order, and quantify the 2026 impact on your balances.
This article is for general information only and does not constitute tax advice. Your circumstances may alter the outcome. Speak to a qualified adviser before acting.
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