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On 26 November 2025, Chancellor Rachel Reeves, announced some changes to capital allowances.

Main Rate Pool Allowances Falls to 14%

• The Main (or General) Pool Plant Writing Down Allowance (WDA) will fall from 18% to 14% from 6 April 2026 (Income Tax) and 1 April 2026 (Corporate Tax).
  • This pool includes items such as IT, furniture, security and telecoms systems, fire alarms, machinery etc.
  • This measure is expected to raise £1bn in 26/27, and £1.5bn in subsequent tax years.
• The Full Expensing regime for company’s subject to CT, continues to apply for new capex.
  • So, the above will principally impact existing pools, plus second-hand assets, cars, and leasing.

New 40% First Year Allowance (FYA)

• For new capex incurred from 1 January 2026, this FYA will be introduced for the main (or general) pool.
• Unlike Full Expensing, it will be available for unincorporated businesses and UK leasing assets.
  • It will not apply for second-hand assets, cars, and assets for leasing overseas.
• For a Property Investor, this would apply where they provide a package of loose furniture.
  • Such assets do not qualify for 100% Full Expensing, as they are not Background Plant and Machinery.

Electric Charging Points – 100% FYA

• This 100% capital allowances for expenditure incurred on charging points for electric vehicles, will be extended to 31 March 2027 (Corporation Tax) and 5 April 2027 (Income Tax). 
• This is a further one-year extension.
• 100% FYA have also been extended for zero emission cars, again to 2027 as above.