Last updated: 16 October 2026
What changed in April 2026?
The main pool writing down allowance (WDA) fell from 18% to 14% a year. The change took effect on 1 April 2026 for companies and on 6 April 2026 for sole traders and partnerships. The special rate pool stays at 6%. At the same time, a new 40% first-year allowance has been available since 1 January 2026 for new main rate plant and machinery, including assets for leasing.
Why transitional rules are needed
Many businesses have accounting periods that do not line up with 1 or 6 April. For a period that straddles the date, you use a hybrid rate. You time-apportion the old and new rates by the number of days in the period before and after the change.
Worked example
A company has a year ending 31 December 2026, a main pool balance of £100,000 and no additions.
- Days before 1 April 2026: 90 at 18%
- Days from 1 April 2026: 275 at 14%
- Hybrid rate: (18% x 90 + 14% x 275) / 365 = 14.99%
- WDA for the year: £14,990
- Next year the full 14% applies.
Which allowances still give 100% relief?
| Allowance | Who can claim | Rate |
| Annual Investment Allowance | All businesses, up to £1 million a year | 100% |
| Full expensing | Companies, new main pool plant | 100% |
| 50% first-year allowance | Companies, new special rate assets | 50% |
| 40% first-year allowance | All businesses, new main rate plant (from 1 January 2026) | 40% |
| Main pool WDA | All | 14% (18% before April 2026) |
| Special rate pool WDA | All | 6% |
The AIA limit is permanently set at £1 million, so the old transitional rules for AIA changes are no longer needed.
Planning tips
- Use the AIA or full expensing on new spending where possible, so less goes into the pool at the lower rate.
- Claim the small pool allowance if the main pool balance is £1,000 or less.
- Time disposals with care, because a balancing charge reduces the pool.
- Check your software uses the hybrid rate for periods that span April 2026.
Cars
Cars do not qualify for the AIA. New zero-emission cars get a 100% first-year allowance. Cars with CO2 emissions up to 50g/km go into the main pool at 14%, and higher-emission cars go into the special rate pool at 6%.
Unincorporated businesses with a 5 April year end
Since basis period reform, sole traders and partners are taxed on profits for the tax year itself. If your accounts run to 31 March or 5 April, your 2026/27 period starts after the change and the full 14% rate applies. If your accounts end on another date, profits are apportioned to the tax year, and the WDA for any period that spans 6 April 2026 uses a hybrid rate worked out in the same way as for companies.
Disposals and balancing adjustments
When you sell an asset from the main pool, deduct the sale proceeds (capped at original cost) from the pool before working out the WDA. If proceeds are more than the pool balance, the excess is a balancing charge and is added to taxable profits.
Frequently asked questions
Does the hybrid rate apply to the special rate pool?
No. The special rate stays at 6%, so no hybrid rate is needed.
Do sole traders use 6 April?
Yes. For income tax the change applies from 6 April 2026.
Can I choose to claim less than the full WDA?
Yes. You can claim any amount up to the maximum and carry the balance forward.
Is the 40% FYA available for second-hand assets?
No, only for new, unused plant and machinery.
Related: full expensing and the pool balance, AIA for sole traders and allowances on old and new cars.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with capital allowances claims. See our limited company accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 16 October 2026. It is not personal advice, so speak to an accountant about your own situation.
