UK plans 50% first-year capital allowance and 12% writing-down rate
A tax note published on 29 October sets out an increase in the UK main-rate first-year capital allowance from 40% to 50% and a reduction in the main writing-down allowance from 14% to 12% a year.
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A tax note published on 29 October sets out an increase in the UK main-rate first-year capital allowance from 40% to 50% and a reduction in the main writing-down allowance from 14% to 12% a year. The first-year change covers qualifying expenditure incurred from 1 January 2027.
The 12% writing-down rate applies to chargeable periods starting from 1 April 2027 for corporation tax and 6 April 2027 for income tax. Periods spanning those dates receive a blended rate based on the time on either side of the change. The special writing-down rate remains 6%.
The government intends to legislate through Finance Bill 2026–27. The first-year allowance particularly supports qualifying investment by unincorporated businesses and investment in plant or machinery for leasing. Full expensing and the one-million-pound annual investment allowance continue to provide upfront relief for most new plant and machinery investment. These are deductions for qualifying expenditure, rather than cash grants or reductions in the headline corporation-tax rate.
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Publication of the official announcement on 29 October 2026.
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UK plans 50% first-year capital allowance and 12% writing-down rate
A tax note published on 29 October sets out an increase in the UK main-rate first-year capital allowance from 40% to 50% and a reduction in the main writing-down allowance from 14% to 12% a year. The first-year change covers qualifying expenditure incurred from 1 January 2027.
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