Writing down allowances determine how quickly you recover the cost of plant and machinery in your property business through capital allowances. The rate matters: it controls how much taxable profit you can shelter each year. From April 2026 the headline rate changed, and there is a good deal of misinformation about what actually moved.
Here is the position in one line. The main pool writing down allowance dropped from 18% to 14% from 1 April 2026 for companies and 6 April 2026 for individuals (Capital Allowances Act 2001 section 56, substituted by Finance Act 2026 section 28) [1]. The special rate pool writing down allowance is unchanged at 6% [2]. And a new 40% first-year allowance now applies to qualifying main-rate plant and machinery bought from 1 January 2026 (Finance Act 2026 section 29) [3].
This guide gives the current rates, the hybrid transitional rate for periods that straddle the change, the new first-year allowance, and how all of this applies in practice to a landlord or property company, with worked examples.
Writing down allowance and capital allowance rates 2026/27 at a glance
| Allowance | Rate | From | Statute |
|---|---|---|---|
| Main pool writing down allowance | 14% reducing balance (was 18%) | 1 April 2026 (CT), 6 April 2026 (IT) | CAA 2001 s.56 (FA 2026 s.28) |
| Special rate pool writing down allowance | 6% reducing balance (unchanged) | No change | CAA 2001 s.104D |
| 40% first-year allowance (new and unused main-rate plant and machinery) | 40% of cost in year one | 1 January 2026 | FA 2026 s.29 |
| Annual investment allowance | 100% up to £1,000,000 | Permanent from 1 April 2023 | CAA 2001 s.51A |
| Structures and buildings allowance | 3% straight line (non-residential only) | Unchanged | CAA 2001 s.270AA |
| Full expensing (companies only) | 100% of cost in year one | Permanent from 1 April 2023 | CAA 2001 s.45S |
| Zero-emission car first-year allowance | 100% of cost in year one | To 31 March 2027 (CT), 5 April 2027 (IT) | CAA 2001 s.45D |
The two changes that matter most for 2026 are the main pool cut to 14% and the new 40% first-year allowance. The pairing is deliberate: the government slowed down the writing down route while opening a much faster first-year route for qualifying new plant and machinery. For a deeper decision framework across the whole capital allowances code, see our capital allowances pillar guide for property investors.
What are writing down allowances?
Writing down allowances are a form of capital allowance that gives tax relief on the cost of plant and machinery on a reducing-balance basis. Unlike the annual investment allowance or a first-year allowance, which give relief up front, writing down allowances spread the relief across several years, taking a fixed percentage of the remaining balance each year.
They are the fallback route. You claim a writing down allowance where the expenditure does not qualify for another allowance, or where value remains after you have claimed the maximum of another allowance [1]. In practice that means: claim the annual investment allowance or the new 40% first-year allowance first where you can, then writing down allowances mop up whatever is left.
Plant and machinery sits in pools. There are three you need to know: the main pool (most general plant and machinery, 14% from April 2026), the special rate pool (integral features and long-life assets, 6%), and single-asset pools (used for items such as cars or assets with significant private use). You do not track most assets individually once they enter a pool; you apply the rate to the pool balance.
The main pool rate: 18% before April 2026, 14% from April 2026
The main pool writing down allowance is now 14%. Capital Allowances Act 2001 section 56(1) reads "14% of the amount by which AQE exceeds TDR", annotated as substituted by Finance Act 2026 section 28(1) [1]. Finance Act 2026 received Royal Assent on 18 March 2026, so this is current law, not a proposal.
The 14% rate applies to chargeable periods beginning on or after 1 April 2026 for corporation tax and on or after 6 April 2026 for income tax. For chargeable periods that begin before those dates, the old 18% rate still applies. There is no per-asset split based on when you bought each item: the rate is set by the chargeable period, and it applies to the whole main pool balance for that period. An older description doing the rounds, that "assets already in the pool keep getting 18% while new ones get 14%", is wrong. It is the period that decides the rate, not the vintage of each asset.
This makes the reducing-balance route slower than it used to be. A £10,000 main pool balance now yields £1,400 of relief in year one instead of £1,800. That is the policy trade: the writing down route is slower, but the new 40% first-year allowance (below) is far faster for qualifying spend.
The hybrid rate for straddling chargeable periods
Many businesses have a chargeable period that spans the change date. A company with a 31 December year end, for example, has a period running from 1 January 2026 to 31 December 2026, which crosses 1 April 2026. For these straddling periods the main pool writing down allowance is a hybrid rate, time-apportioned between 18% for the part of the period before the change and 14% for the part on or after it (Finance Act 2026 section 28(2) to (6)) [1]. The GOV.UK measure confirms a hybrid rate has effect for periods spanning the start date [3].
Worked example: a hybrid-rate year
A property investment company has a 31 December 2026 year end. The chargeable period runs the full calendar year, 365 days. Of those, 90 days (1 January to 31 March 2026) fall before the change at 18%, and 275 days (1 April to 31 December 2026) fall on or after it at 14%.
The hybrid rate is (90 ÷ 365 × 18%) plus (275 ÷ 365 × 14%), which is roughly 4.44% plus 10.55%, giving about 14.99%, call it 15% for that single straddling year. If the company has a £40,000 main pool balance, it claims around £6,000 for the period (15% of £40,000) rather than £5,600 at the flat 14%. From the year ended 31 December 2027 onwards, the flat 14% rate applies and the claim falls back to 14% of the reducing balance.
The arithmetic is rounded for illustration; the precise apportionment uses the exact day counts in your period. The point is that a single straddling period sits between the two rates, and only the period after it settles fully at 14%.
The special rate pool: still 6%, not 4%
The special rate pool writing down allowance is unchanged at 6%. This is worth stating clearly because the previous version of guidance on this topic, including an earlier version of this page, wrongly claimed the special rate fell to 4% in 2026. It did not.
Two sources settle it. The GOV.UK measure that cut the main rate to 14% says, in terms, that it "does not change the WDA on the special rate pool which is currently 6%" [3]. And CAA 2001 section 104D still reads 6%, with its only relevant change being the Finance Act 2019 substitution from 8% down to 6% [2]. There has been no further cut. The special rate stays at 6%.
The special rate pool holds integral features (CAA 2001 section 33A): electrical and lighting systems, cold and hot water systems, space and water heating, air conditioning and ventilation, lifts and escalators, and external solar shading. It also holds long-life assets and thermal insulation of an existing building. If the long-life items you buy in a chargeable period exceed £100,000, the cost goes in the special rate pool rather than the main pool [1]. For the detailed mechanics of identifying and valuing integral features in a property purchase, see our guide to integral features capital allowances.
The new 40% first-year allowance from 1 January 2026
The biggest 2026 development is not the rate cut, it is the new 40% first-year allowance. From 1 January 2026, qualifying spending on new and unused main-rate plant and machinery attracts a 40% first-year allowance (Finance Act 2026 section 29) [3]. You claim 40% of the cost in the year of purchase, and the remaining 60% enters the main pool for writing down allowances at 14%.
Crucially for property businesses, this allowance is available to all businesses, including unincorporated landlords and property partnerships. It is also available where the asset is leased, which company-only full expensing is not. It does not cover everything: cars are excluded, second-hand or used assets are excluded, and assets bought for leasing overseas are excluded. The asset must be new and unused and must be main-rate plant and machinery.
For companies, the 100% full-expensing first-year allowance (CAA 2001 section 45S) is the more generous companion route for qualifying new main-rate plant. Our guide to full expensing for property companies covers when full expensing beats the 40% allowance and when it is unavailable. For most property businesses the practical order of preference is: the annual investment allowance up to £1 million, then full expensing (companies) or the 40% first-year allowance (everyone), then writing down allowances on the balance.
Annual investment allowance versus writing down allowances
The annual investment allowance gives 100% relief on qualifying plant and machinery up to £1 million in the year of purchase. It has been permanent at £1 million since 1 April 2023 (CAA 2001 section 51A, made permanent by F(No.2)A 2023 section 8). For most landlords with qualifying spend below the cap, the annual investment allowance is the simplest and fastest relief.
Writing down allowances then handle what the annual investment allowance and first-year allowances do not reach: spend above the £1 million cap, assets that do not qualify for the annual investment allowance (such as cars), and the residual 60% of cost left in the pool after a 40% first-year allowance claim. The annual investment allowance can be allocated across pools, and allocating it first to special rate pool items (relieved at only 6% on the reducing balance) usually gives a better result than leaving them to write down slowly. The £1 million cap interacts with group and association rules, which our guide to the annual investment allowance £1m cap and allocation strategy covers in detail.
Worked example: a reducing-balance schedule
A property investment company spends £50,000 on qualifying new main-rate plant and machinery for a commercial unit it lets out (this is non-dwelling spend, so the section 35 bar below does not apply). Assume the annual investment allowance has already been used elsewhere, so the company turns to the 40% first-year allowance and then writing down allowances.
Year one: the company claims a 40% first-year allowance of £20,000 (40% of £50,000). The remaining £30,000 enters the main pool.
| Year | Main pool balance brought forward | Writing down allowance at 14% | Balance carried forward |
|---|---|---|---|
| 1 (after 40% FYA) | £30,000 | £4,200 | £25,800 |
| 2 | £25,800 | £3,612 | £22,188 |
| 3 | £22,188 | £3,106 | £19,082 |
| 4 | £19,082 | £2,671 | £16,411 |
So in year one the company gets £20,000 (first-year allowance) plus £4,200 (writing down allowance), a total of £24,200 of relief on a £50,000 spend. The pool then carries forward and writes down at 14% each year. Had the same £50,000 been a special rate pool item, the writing down element would run at 6%, materially slower, which is why the £100,000 long-life threshold and correct pool classification matter.
Can residential landlords claim writing down allowances?
This is the most common and most consequential misconception in property capital allowances, so it is worth being precise. For an ordinary residential property business, the answer for in-dwelling plant and machinery is no.
Capital Allowances Act 2001 section 35 provides that expenditure is not qualifying expenditure if it is incurred in providing plant or machinery for use in a dwelling-house [4]. That bars capital allowances on boilers, central heating, white goods, carpets, curtains, furniture and similar items inside a let dwelling. The relief route for those items is different: replacing a domestic item is relieved through Replacement of Domestic Items Relief under ITTOIA 2005 section 311A, not through capital allowances [5]. That relief covers the cost of replacing (not first providing) movable furniture, furnishings, household appliances and kitchenware in a let dwelling.
There is a genuine exception. Plant and machinery in the communal common parts of a building, the shared hallways, stairwells, boiler rooms and lift shafts of a multi-let block or a house in multiple occupation, is not in a dwelling-house and can qualify for capital allowances. The boundary between dwelling and common parts is the whole battleground for HMO claims, and we treat it in full in our guide to HMO common parts capital allowances and the section 35 claim mechanics. Commercial property is outside section 35 entirely, so the full plant and machinery regime is available there.
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Structures and buildings allowance
Separate from plant and machinery, the structures and buildings allowance gives relief on the construction, renovation or acquisition cost of non-residential buildings and structures. The rate is 3% straight-line per year (CAA 2001 section 270AA) [6]. The 3% rate was set by Finance Act 2021 (uplifted from the original 2%) with effect from April 2020, and it is unaffected by the 2026 writing down allowance changes.
The structures and buildings allowance is straight-line, not reducing balance: you claim a flat 3% of the original qualifying cost each year for just over 33 years. It applies to commercial property such as offices, shops, warehouses and industrial units, and to the qualifying structural parts of a building. Residential dwellings are excluded. For the claim mechanics, the allowance statement requirement and the disposal rules, see our guide to the structures and buildings allowance 3% claim mechanics.
Pools, disposals, balancing allowances and balancing charges
Because writing down allowances run on a pool basis, you do not crystallise a gain or loss on each asset year by year. The events that matter are disposals. When you sell or scrap an asset, you bring a disposal value into the relevant pool, normally capped at the original cost, and deduct it from the pool balance.
If that deduction takes the pool below zero, you have a balancing charge, which is added to your taxable profit (it claws back relief you over-claimed). If a qualifying activity ends with a positive balance remaining, you may instead get a balancing allowance, giving relief for the unrelieved cost. On the sale of a let commercial property, the fixtures and integral features that have been pooled can trigger these events, and the fixtures-election and pooling rules between buyer and seller can be significant. Our guide to balancing allowances and balancing charges on disposal works through the mechanics.
Cars, zero-emission vehicles and the writing down route
Cars are excluded from both the annual investment allowance and the new 40% first-year allowance, so they are relieved through writing down allowances based on CO2 emissions, except for new and unused zero-emission cars (0 g/km), which still attract a 100% first-year allowance (CAA 2001 section 45D) to 31 March 2027 for companies and 5 April 2027 for individuals. Higher-emission cars go in the special rate pool at 6%, and cleaner cars in the main pool at 14%. If a car has private use by a sole trader or partner, it sits in a single-asset pool. The emissions bands and the single-asset-pool mechanics are covered in our guide to writing down allowances on cars.
How capital allowances sit alongside Section 24
Section 24 restricts finance-cost relief for individual landlords to a basic-rate tax reduction, but it does not touch capital allowances. Writing down allowances, the annual investment allowance and the 40% first-year allowance reduce taxable rental profit directly, which is particularly valuable for higher and additional-rate landlords whose interest relief is already restricted. Our guide to claiming mortgage interest relief under Section 24 explains the interaction.
For landlords weighing incorporation, capital allowances pools can transfer to a limited company as part of the incorporation, and the pool balances carry across rather than being lost. Our guide to buy-to-let limited companies covers how the transfer works in practice, including the connected-party rules.
Timing, planning and record keeping
The order of reliefs is the main planning lever: claim the annual investment allowance and any first-year allowance first, then writing down allowances on the balance. For most qualifying spend the rate cut to 14% is secondary, because the £1 million annual investment allowance and the 40% first-year allowance already deliver faster relief. Where writing down allowances are the only route, spend landing in a chargeable period that begins before the change date attracts 18%, a straddling period attracts the hybrid rate, and later periods settle at 14%. The commercial decision should drive timing, not the rate alone.
Pool classification is the other place claims go wrong. Allocating expenditure correctly between the main pool, the special rate pool and any single-asset pool decides the rate, and misclassification either over-claims (risking a later adjustment) or under-claims (leaving relief on the table). For larger portfolios, a separate pool register per property keeps the position clean. For the wider tax picture on a rental business, our complete guide to property investment tax sets capital allowances in context alongside income, finance costs and disposals.
Making Tax Digital for Income Tax is being phased in from 6 April 2026 for landlords and sole traders with qualifying income over £50,000, then 6 April 2027 at £30,000 and 6 April 2028 at £20,000. Affected landlords must keep digital records and send quarterly updates, so a digital capital allowances pool register that tracks each pool over time becomes part of normal compliance rather than an optional extra.
Sources
- legislation.gov.uk: Capital Allowances Act 2001, section 56 (main pool writing-down allowance, 14%, substituted by Finance Act 2026 s.28(1))
- legislation.gov.uk: Capital Allowances Act 2001, section 104D (special rate pool writing-down allowance, 6%)
- gov.uk: Capital allowances: new first-year allowance and reducing main rate writing-down allowances (GOV.UK measure)
- legislation.gov.uk: Capital Allowances Act 2001, section 35 (exclusion of plant or machinery for use in a dwelling-house)
- legislation.gov.uk: ITTOIA 2005, section 311A (Replacement of Domestic Items Relief)
- legislation.gov.uk: Capital Allowances Act 2001, section 270AA (structures and buildings allowance, 3%)
- gov.uk: Work out your capital allowances: rates and pools (GOV.UK)