Writing Down Allowances: Pools, Rates, and Balancing Charges

Writing down allowances are the UK tax relief that lets a business deduct a set percentage of the reducing value of its plant and machinery from taxable profits each year. From April 2026, the main pool rate is 14% and the special rate pool is 6%.¹² They apply to whatever qualifying capital spending is left after the Annual Investment Allowance and any first-year allowances have been used, so they matter most for businesses with ongoing or larger equipment costs.

When You Actually Need to Use WDAs

Two other allowances usually come first. The Annual Investment Allowance gives 100% relief on qualifying plant and machinery up to £1,000,000 a year, which is enough to write off the entire equipment spend for most smaller businesses without ever touching a WDA. Certain assets also qualify for first-year allowances: new zero-emission cars get 100% in the year of purchase, and a new 40% first-year allowance took effect on 1 January 2026 for qualifying expenditure.³¹

WDAs take over from there. Spend £1,200,000 on qualifying equipment in a year, and the AIA covers the first £1,000,000 in full. The remaining £200,000 goes into a pool and is written down at the relevant percentage each year afterwards. Full expensing, which gave companies 100% relief on main rate assets, ended on 31 March 2026, which pushes more expenditure through the WDA route than before.⁴

What Qualifies

WDAs cover plant and machinery as defined by the Capital Allowances Act 2001. In practice that means office furniture, computers, tools, manufacturing machinery, storage equipment, and functional building fixtures such as fire alarm and security systems. The asset has to be owned by the business and used to generate income.

Cars have their own logic based on CO2 emissions. A new electric car with zero emissions gets 100% first-year relief and never enters a pool. Second-hand electric cars, and any car emitting 50g/km or less, go into the main pool. Cars above 50g/km go into the special rate pool.³

One boundary worth flagging: sole traders and partnerships using the cash basis can only claim capital allowances on cars, not on other plant and machinery. Personal-use assets are also out.

The Two Pools

Every qualifying asset is assigned to one of two pools, and the pool decides the rate.

The main pool, at 14% from April 2026, holds most general business equipment: desks, computers, vans, tools, machinery, and lower-emission cars.²

The special rate pool, at 6%, holds items with longer useful lives or specific characteristics:

Integral features: electrical and lighting systems, cold water systems, heating and ventilation, lifts, escalators, moving walkways, and external solar shading.⁵
Long-life assets with an expected useful life of 25 years or more.
Thermal insulation added to an existing business building.
Solar panels.
Cars with CO2 emissions above 50g/km.³

Getting this right matters. Putting a special rate item into the main pool inflates the claim and creates a compliance risk. If it isn’t obvious whether something is an integral feature, check HMRC’s capital allowances manual or take advice before filing.

How the Calculation Works

WDAs use the reducing balance method. Take the pool balance carried forward from last year, add any new qualifying expenditure, subtract disposal proceeds, and apply the percentage to what’s left. The deduction shrinks each year because it is always a percentage of a declining balance rather than the original cost.

Main Pool at 14%

A main pool carries forward at £50,000. During the year you add £15,000 of new equipment not covered by the AIA, and sell an old machine for £3,000. The adjusted balance is £62,000. The WDA at 14% is £8,680, which comes off taxable profits, and £53,320 carries into the next period.²

Special Rate Pool at 6%

A special rate balance of £30,000 produces a WDA of £1,800 for the year, leaving £28,200 to carry forward. Because 6% is so much slower than 14%, businesses with heavy integral feature spending feel the drag over time, which is why the AIA or a first-year allowance should absorb this expenditure first wherever possible.

Small Pool Write-Off

If a main pool or special rate pool balance falls to £1,000 or less before you work out the WDA, you can claim the whole remaining amount in one go rather than keep chipping away at it.⁶ This is the small pools allowance, claimed instead of the standard WDA for that pool.

Short Accounting Periods

WDAs are scaled down when the accounting period is shorter than 12 months. A nine-month period only supports 9/12 of the normal WDA.² New businesses whose first period runs less than a year, and companies changing their year-end, are the ones who usually get caught by this.

Selling Assets and Balancing Charges

When you sell, scrap, or give away an asset from a pool, deduct the disposal value from the pool balance. Normally that’s the amount you received, but you can never deduct more than the original cost even if the sale price was higher.⁷

If the disposal value exceeds the pool balance, the pool goes negative. That excess is a balancing charge and is added back to taxable profits. In effect, HMRC recovers relief you claimed on value that turned out not to have been lost. Selling several older items in a single year against a low pool balance is the classic route to an unexpected tax bill here.⁷ If the pool stays positive after the disposal, you just carry on claiming WDAs on the reduced balance.

How to Claim

Sole traders and partnerships claim WDAs through the capital allowances section of the Self-Assessment tax return. HMRC’s helpsheet HS252 sets out the calculation steps for each pool.⁶ Limited companies enter the figures on their Company Tax Return, form CT600, along with the supporting computations.⁸ Both are filed through HMRC’s online system.

For each pool, three figures do the work: the tax written down value brought forward, the cost of new additions not covered by the AIA or a first-year allowance, and the disposal proceeds for anything sold or scrapped. From those, you calculate the adjusted balance, apply the rate, and record the carrying value for next year.

Accuracy carries real exposure. HMRC’s penalty regime is graduated by behaviour: careless errors attract penalties of up to 30% of the extra tax due, deliberate inaccuracies range from 20% to 70%, and deliberate and concealed inaccuracies range from 30% to 100%.⁹ Disclosing an error before HMRC finds it reduces the penalty significantly.

Records to Keep

Hold on to purchase invoices, receipts, and disposal records for every asset in your pools. You need them to justify the return if HMRC opens an enquiry and to work out the correct pool balance each year. Records should be kept for the life of the asset plus the limitation period after disposal, which in practice means several years past the point an asset leaves the business.

The most common failure is losing track of the tax written down value between years. If the opening balance is wrong, every calculation that follows is wrong. A simple spreadsheet per pool showing opening balance, additions, disposals, WDA claimed, and closing balance keeps the annual return straightforward and gives you an audit trail if questions come up later.

1
GOV.UK. New First-Year Allowance and Main Rate of Writing-Down Allowances
2
GOV.UK. Work Out Your Writing Down Allowances – Rates and Pools
3
GOV.UK. Claim Capital Allowances – Business Cars
4
GOV.UK. Capital Allowances – Full Expensing for Companies Investing in Plant and Machinery From 1 April 2023 Until 31 March 2026
5
GOV.UK. CA22320 – Capital Allowances Manual
6
GOV.UK. HS252 Capital Allowances and Balancing Charges 2026
7
GOV.UK. Capital Allowances When You Sell an Asset
8
GOV.UK. Completing Your Company Tax Return
9
GOV.UK. Penalties – An Overview for Agents and Advisers