What Is Writing Down Allowance on Cars?

Writing down allowance on cars is a form of capital allowance that lets you deduct the cost of a business car from your taxable profits over several years. If you use a car for your property business, whether you are a sole trader landlord or run a limited company, you can claim this relief on the car's value each year [1].

For UK property investors, claiming the correct writing down allowance can reduce your tax bill significantly. The allowance applies to cars that are suitable for private use and not built for transporting goods [1]. Motorcycles bought before 6 April 2009 do not count as cars for capital allowance purposes [1].

This guide explains how writing down allowance on cars works, the rates that apply, and what changes are coming from April 2026.

How Does Writing Down Allowance Work?

Writing down allowance (WDA) is calculated on the reducing balance of the car's value. You claim a percentage of the car's value each year, and the allowance reduces as the car depreciates [2].

For example, if you buy a car for £20,000 that qualifies for the main rate WDA of 18%, you can claim £3,600 in year one. The remaining value becomes £16,400, and in year two you claim 18% of that, £2,952, and so on.

You can claim writing down allowances if your plant and machinery does not qualify for another allowance, or if there is value remaining after claiming the maximum amount of another allowance [3].

If you are a sole trader or partnership using cash basis accounting, you can only claim capital allowances on business cars [3]. This is an important distinction for landlords who may use cash basis for their rental income.

Current Writing Down Allowance Rates for Cars

The rate of writing down allowance you can claim depends on the car's CO2 emissions and when it was bought. There are two main rate categories [1]:

  • Main rate (18%): Applies to cars with CO2 emissions of 50g/km or less, including electric cars after the first year.
  • Special rate (6%): Applies to cars with CO2 emissions above 50g/km.

These rates apply from 1 April for businesses that pay Corporation Tax, and 6 April for businesses that pay Income Tax [1].

New and unused cars with CO2 emissions of 0g/km (electric cars) qualify for 100% first-year allowances [1]. This means you can deduct the full cost of an electric car in the year you buy it, subject to certain conditions.

For cars with CO2 emissions of 50g/km or less, the main rate writing down allowance is 100% in the first year (first year allowance) and then 18% per annum on the reducing balance [4].

Major Changes From April 2026

Several important changes to writing down allowance on cars take effect from April 2026. These affect both corporation tax payers and income tax payers [5]:

  • Main rate reduction: From 1 April 2026 for corporation tax and 6 April 2026 for income tax, main rate writing-down allowances will reduce from 18% to 14% [5].
  • New first-year allowance: From 1 January 2026, a new first-year allowance of 40% for main-rate assets is introduced to preserve incentives to invest [5].
  • ZEV extension: First-year 100% allowances for zero-emission vehicles (ZEVs) and chargepoints is extended to 31 March 2027 for corporation tax purposes and 5 April 2027 for income tax purposes [5].

These changes mean that property investors planning to buy a business car should consider timing their purchase to maximise available relief.

Writing Down Allowance vs Annual Investment Allowance

The annual investment allowance (AIA) allows you to claim up to £1 million on certain plant and machinery in the year of purchase [3]. However, cars are generally excluded from AIA unless they are zero-emission vehicles.

If an item qualifies for more than one capital allowance, you can choose which one to use [3]. For most property investors, writing down allowance on cars will be the primary route for claiming relief on business vehicles.

For a complete list of allowable deductions for landlords, see our guide on landlord tax deductions.

Claiming Writing Down Allowance as a Property Investor

To claim writing down allowance on cars, you must use the car for your property business. If you use the car for both business and personal purposes, you can only claim the business proportion.

For example, if you use your car 60% for property business travel and 40% privately, you claim WDA on 60% of the car's value. You must keep detailed mileage records to support your claim.

Property investors who are sole traders or in partnerships can claim capital allowances on business cars even if they use cash basis accounting [3]. This is a specific exception to the general rule that cash basis users cannot claim capital allowances.

If you run your property portfolio through a limited company, the rules are similar but the rates apply from 1 April rather than 6 April [1]. For more on company structures, see our guide on buy-to-let limited companies.

Electric Cars and Writing Down Allowance

Electric cars receive favourable treatment under the capital allowance rules. New and unused electric cars (0g/km CO2) qualify for 100% first-year allowances [1]. This means you can deduct the full cost in the year of purchase.

The 100% first-year allowance for zero-emission vehicles is extended to 31 March 2027 for corporation tax purposes and 5 April 2027 for income tax purposes [5]. After the first year, electric cars fall into the main rate pool at 18% (reducing to 14% from April 2026).

From April 2028, a new mileage charge for electric and plug-in hybrid cars is introduced, called Electric Vehicle Excise Duty (eVED) [5]. Electric cars will pay half the equivalent fuel duty rate for petrol and diesel cars, and plug-in hybrid cars will pay a reduced rate equivalent to half of the electric car rate [5].

For property investors considering electric vehicles, the combination of 100% first-year allowances and lower ongoing running costs can make them a tax-efficient choice.

Practical Example: Writing Down Allowance Calculation

Let's look at a practical example. A landlord with a property portfolio buys a new petrol car for £25,000 in June 2025. The car has CO2 emissions of 120g/km, so it falls into the special rate pool at 6%.

  • Year 1 (2025/26): WDA = £25,000 × 6% = £1,500. Remaining value = £23,500.
  • Year 2 (2026/27): WDA = £23,500 × 6% = £1,410. Remaining value = £22,090.
  • Year 3 (2027/28): WDA = £22,090 × 6% = £1,325.40. Remaining value = £20,764.60.

If the same landlord bought an electric car for £35,000 in June 2025, they could claim 100% first-year allowance of £35,000 in year one, reducing their taxable profits by the full amount.

Common Mistakes to Avoid

Property investors often make errors when claiming writing down allowance on cars. Here are the most common:

  • Claiming on cars used only privately: You can only claim WDA on cars used for your property business.
  • Using the wrong rate: Check the CO2 emissions to determine whether main rate (18%) or special rate (6%) applies.
  • Forgetting the April 2026 changes: The main rate drops to 14% from April 2026, so plan your purchases accordingly.
  • Not keeping mileage records: HMRC requires evidence of business use to support your claim.

If you are unsure about your specific situation, it is worth speaking to a specialist. Our team at Property Tax Partners can help, see our services page for more information.

Writing Down Allowance and Section 24

Section 24 restricts mortgage interest relief for individual landlords to the basic rate of tax (20% tax credit). However, capital allowances, including writing down allowance on cars, are not affected by Section 24. You can still claim these deductions against your rental income.

For a full explanation of how Section 24 works, see our complete guide to Section 24.

If you are considering incorporating your property portfolio to avoid Section 24 restrictions, our guide on incorporation explains the process and tax implications.

Making Tax Digital and Car Allowances

From 6 April 2026, Making Tax Digital (MTD) for Income Tax becomes mandatory for landlords with gross property income over £50,000 [5]. This means you will need to keep digital records of your car expenses and capital allowance claims.

For more on MTD requirements, see our guide on Making Tax Digital for landlords.

Summary

Writing down allowance on cars is a valuable tax relief for UK property investors who use vehicles for their business. Key points to remember:

  • Main rate WDA is currently 18% but reduces to 14% from April 2026.
  • Special rate WDA is 6% for cars with CO2 emissions above 50g/km.
  • Electric cars qualify for 100% first-year allowances until April 2027.
  • Keep detailed mileage records to support your claim.
  • Consider timing your car purchase to maximise available relief.

For personalised advice on your property tax situation, contact our team or learn more about what a property accountant does.

Sources

  1. gov.uk: Claim capital allowances: Business cars - GOV.UK
  2. gov.uk: Work out your writing down allowances - GOV.UK
  3. aka.hmrc.gov.uk: Claim capital allowances: Overview - GOV.UK
  4. icaew.com: Winners and losers from capital allowances changes - ICAEW.com
  5. accaglobal.com: Capital allowances and electric car changes - ACCA Global