Capital Allowances Main Pool: 18% WDA, AIA, and Disposals

The capital allowances main pool is the default balance where a UK business collects most of its plant and machinery spending, then writes it down at 18% each year on a reducing balance. Instead of depreciating every desk, van, or machine separately for tax, qualifying costs are grouped into a single running total and a flat percentage of whatever remains is deducted from taxable profits year after year.

The pool has become less central for companies since full expensing arrived in April 2023, but it still does the heavy lifting for second-hand equipment, for spending above the Annual Investment Allowance, and for sole traders and partnerships, who cannot claim full expensing at all.

What Goes Into the Main Pool

The main pool is the destination for plant and machinery that does not belong in the special rate pool or in a single asset pool.¹ In practice that covers most of what a business spends on equipment: computers, printers, commercial vehicles like vans and lorries, general factory machinery, and fixtures that are not integral to the building, such as freestanding shelving or removable kitchen equipment.

Several categories are kept out. Integral features of a building (lifts, escalators, heating and cooling, electrical and lighting, hot and cold water systems, external solar shading), thermal insulation, solar panels, long-life assets with a useful life of 25 years or more where total long-life spending exceeds £100,000 in the period, and cars with CO2 emissions above 50 g/km all go into the special rate pool at 6% instead. Assets used partly for private purposes go into a single asset pool so the business and personal shares can be tracked. Land, buildings themselves, and anything bought exclusively for entertainment do not qualify for capital allowances at any rate.

Getting the allocation right at the outset matters because it decides how quickly the tax relief actually arrives.

How the 18% Writing Down Allowance Works

Each year, multiply the pool’s written down value (WDV) at the start of the period by 18%. That figure is deducted from taxable profits, and what is left carries forward to the next year.¹ Because the same percentage is applied to a shrinking balance, the biggest deductions come early and the amounts taper.

Say a main pool has an opening WDV of £100,000.

Year one: 18% × £100,000 = £18,000 allowance. Balance carried forward: £82,000.
Year two: 18% × £82,000 = £14,760. Balance: £67,240.
By year five the annual allowance drops below £10,000, even though a meaningful balance remains.

New qualifying spending during the year (net of anything claimed under the Annual Investment Allowance and net of disposal proceeds) is folded into the pool before the 18% is applied. The pool is not tracked asset by asset; everything blends into one running total.

When the Pool Falls Below £1,000

Once the pool’s value drops to £1,000 or less, after adding new expenditure and subtracting disposals for the period, you can write off the entire remaining balance in one go instead of claiming the standard 18%.² This is the small pools allowance. You choose one or the other in a given period; you cannot claim both on the same pool.

Short Accounting Periods

If the accounting period is shorter or longer than 12 months, the WDA is adjusted proportionally.³ A six-month period limits the WDA to 9% of the pool balance. The same proportional adjustment applies to the AIA cap and the £1,000 small pools threshold, so a 17-month period raises that threshold to £1,417.⁴ This catches people out when a company changes its year-end.

Where the Main Pool Fits Alongside AIA and Full Expensing

The main pool is rarely the first port of call for new spending because two other reliefs give faster relief.

The Annual Investment Allowance lets any business, whether a sole trader, partnership, or company, deduct 100% of qualifying plant and machinery costs up to £1 million a year. That limit was permanently fixed from 1 April 2023.⁵ Anything claimed under the AIA never enters the main pool because its full cost has already been relieved. If total qualifying spending exceeds £1 million, the excess is added to the main pool and written down at 18%.⁶

Full expensing, available since April 2023, gives incorporated companies 100% relief on new and unused plant and machinery in the year of purchase.⁷ Only companies can use it. Sole traders and partnerships are excluded, so for them the main pool and the AIA remain the primary routes to relief.

What still lands in the main pool, then, is second-hand equipment (which does not qualify for full expensing), spending above the AIA that also falls outside full expensing, and everything bought by unincorporated businesses beyond their £1 million AIA.

Business Cars and the Main Pool

Cars sit awkwardly. They are excluded from both the AIA and full expensing, so the pool system is the only route for any car that does not qualify for a first-year allowance. For cars bought from April 2021 onwards, allocation depends on CO2 emissions:⁸

New and unused zero-emission cars get a 100% first-year allowance, so nothing enters a pool.
Cars with emissions of 50 g/km or less (new or second-hand), and second-hand electric cars, go into the main pool at 18%.
Cars with emissions above 50 g/km go into the special rate pool at 6%.

A petrol company car emitting 120 g/km sits in the special rate pool at 6%, and the tax relief trickles in over many years. A lower-emission choice pulls the same spending into the main pool at 18%, or out of the pool entirely.

Short-Life Asset Elections

If you expect to sell or scrap an asset within a few years, a short-life asset election takes it out of the main pool and puts it in its own single asset pool.¹ The asset still gets the 18% WDA each year, but on disposal any remaining balance becomes a balancing allowance, giving a full deduction. Left in the main pool, that residual value would simply blend into the larger balance and barely dent it.

The election must be made in writing within two years of the end of the accounting period in which the expenditure was incurred (for corporation tax), or by the first anniversary of 31 January following the relevant tax year (for income tax). Once made, it is irrevocable. If the asset is still held after the designated period, it transfers back into the main pool at its current WDV.

Selling or Scrapping Pool Assets

When an asset in the main pool is sold, the disposal proceeds are deducted from the pool’s WDV, capped at the original cost of that asset. If you sell for more than you paid, only the original cost comes out of the pool; any profit above that is a capital gain and handled separately.

Most disposals just reduce the balance and therefore reduce future WDAs. Because everything blends together, selling one item does not usually trigger an immediate tax charge.

Balancing Charges and Balancing Allowances

A balancing charge arises when disposal proceeds exceed the pool’s current WDV, flipping the balance negative. The excess is added back to taxable profits for that period, clawing back allowances already claimed.⁹ This can happen when several assets are sold in quick succession, or when a high-value item leaves a pool that has already been substantially written down.

A balancing allowance on the main pool only arises when the business permanently ceases trading. If the final WDV is still positive after all disposal proceeds are deducted, that remaining balance is claimed as a one-off deduction in the final period.⁹ While the business is trading, there is no mechanism to trigger one on the main pool; the balance simply carries forward and keeps attracting the 18% WDA. Single asset pools are different: a balancing allowance or charge is triggered each time the individual asset is disposed of.