Main writing-down allowance cut to 12%; first-year rate up to 50%

The main rate of writing-down allowances will fall to 12% from 1 April 2027 for Corporation TaxGOV and from 6 April 2027 for Income TaxGOV. The measure covers general plant and machinery expenditure in the main poolGOV, reducing the annual reducing-balance relief available on spend that does not qualify for a first-year allowance or full expensing.

The change is the second step in a sequenced reduction. An earlier measure, New first-year allowance and main rate of writing-down allowances, introduces the 40% allowance for expenditure from 1 January 2026 and sets the main rate at 14% from 1 April 2026 for Corporation Tax and 6 April 2026 for Income Tax; from the corresponding dates a year later the rate will fall again to 12%GOV. Businesses whose accounting periods straddle either change date will need a hybrid or apportioned calculation for that period, as with the earlier rate change.

Alongside the writing-down cut, the main-rate first-year allowance will rise from 40% to 50%GOV for expenditure incurred on or after 1 January 2027GOV. A first-year allowance gives upfront relief in the period of spend, with writing-down allowances available on the balance in later periods: under the current 40% guidance, a qualifying buyer deducts 40% of the cost before tax and claims writing-down allowances on the remaining 60% afterwards. Claim guidance for the 40% allowance says plant or machinery must have been bought on or after 1 January 2026. It must be new and unused, must qualify for the main rate of writing-down allowance and must not be a car; the new measure changes the rate and the from-date for the higher 50% relief.

The timing creates two distinct thresholds. Expenditure incurred on or after 1 January 2027 is in scope for the higher 50% upfront rateGOV, while the lower 12% writing-down rate applies from the April dates by taxGOV. Spending brought forward into late 2026 therefore attracts the 40% first-year rate and the 14% writing-down rate, while spending on or after 1 January 2027 attracts the 50% upfront rate, with any unrelieved balance then written down at 12% once the April 2027 rate takes effect.

Capital-allowance planners, finance teams and their advisers should model main-pool claims across the 2026 and 2027 thresholdsGOV, check which expenditure qualifies for the main rate rather than a special-rate or single-asset poolGOV, and diary the January and April dates separately for Income Tax and Corporation Tax computationsGOV.

Legal basis: Reduce the main rate writing-down allowance and increase the main rate first-year allowance, with prior rates in New first-year allowance and main rate of writing-down allowances and Claim capital allowances – 40% first-year allowance.