What is the Writing Down Allowance (WDA)?

The Writing Down Allowance (WDA) is the annual tax deduction available on plant and machinery that is not covered by the Annual Investment Allowance (AIA) or First Year Allowances. The main pool WDA rate is 18% per year on the reducing balance, and the special rate pool is 6% per year. WDA applies to the cumulative pool balance of all assets in that pool.

What is the main pool WDA rate?

The main pool WDA rate is 18% per year on the reducing balance. This applies to most plant and machinery, IT equipment, commercial vehicles, and cars with CO2 emissions of 50g/km or less. For example, a pool balance of £50,000 gives year 1 WDA of £9,000 (18%), leaving £41,000 carried forward.

What is the special rate pool WDA rate?

The special rate pool WDA is 6% per year on the reducing balance. This applies to: integral features (electrical systems, heating, lifts), long-life assets (over 25 years useful life), thermal insulation added to buildings, and cars with CO2 emissions above 50g/km. The 6% rate means it takes significantly longer to obtain full relief compared to main pool assets.

What goes into the main pool?

The main pool includes: most plant and machinery, IT equipment and computers, commercial vehicles (not cars), cars with CO2 emissions of 50g/km or less, and furniture and fittings. All eligible assets in the main pool are combined into a single running balance and WDA is applied at 18% per year to that total balance.

What goes into the special rate pool?

The special rate pool includes: integral features of buildings (electrical systems, cold water systems, heating, ventilation, lifts, escalators), long-life assets with expected useful life over 25 years, thermal insulation added to buildings, and cars with CO2 emissions above 50g/km. WDA is 6% per year on the reducing balance.

How does a balancing charge work?

A balancing charge arises when disposal proceeds exceed the remaining pool balance. For example, if the pool balance is £10,000 and you sell assets for £15,000, there is a balancing charge of £5,000 — this is added back to your taxable profits. Balancing charges can arise in either the main pool or special rate pool.

What is the small pool allowance?

If the main pool balance (after additions and disposals, before WDA) is £1,000 or less, you can claim the entire balance as a small pool allowance rather than 18% WDA. This avoids carrying forward tiny pool balances indefinitely. The small pool allowance does not apply to the special rate pool.

Can I mix AIA and WDA in the same year?

Yes. You first claim AIA on qualifying purchases (up to £1 million). Any excess over the AIA limit, or assets that do not qualify for AIA (like cars), go into the relevant pool and attract WDA at 18% or 6%. In the same tax year you can claim both AIA on new purchases and WDA on the remaining pool balance from previous years.

How do disposals affect the WDA pool?

When you sell or dispose of an asset, the disposal proceeds (limited to original cost) are deducted from the relevant pool balance. The WDA is then calculated on the remaining pool balance. If disposal proceeds exceed the pool balance, a balancing charge arises equal to the excess.

What is a balancing allowance?

A balancing allowance arises when a pool is permanently closed — either the business ceases, or for single-asset pools (short-life asset elections). It gives relief for the remaining pool balance in full. In a continuing business, main pool and special rate pool balancing allowances do not arise — the balance simply continues with annual WDA.

When is it better to use AIA instead of WDA?

AIA is almost always better than WDA because it provides 100% relief in year one, maximising the present value of the tax saving. WDA spreads relief over many years. For example, £100,000 of qualifying plant: AIA gives £100,000 tax deduction in year one; WDA gives only £18,000 in year one, £14,760 in year two, etc. Use AIA for all qualifying assets up to the £1 million limit.

What happens to the pool when business ceases?

When a business ceases, all assets are deemed disposed of at market value. If the disposal proceeds are less than the pool balance, a balancing allowance is claimed (full remaining pool deducted from profits). If proceeds exceed the pool balance, a balancing charge is assessed. This final adjustment ensures total relief equals total cost minus total proceeds.

How does WDA apply to cars?

Cars are in separate pools from general plant. Cars with CO2 emissions of 50g/km or less go into the main pool at 18% WDA. Cars with CO2 emissions above 50g/km go into the special rate pool at 6% WDA. Zero-emission cars may qualify for 100% First Year Allowance. Each car is tracked individually when it is sold or scrapped.

What is the difference between main pool and special rate pool for tax purposes?

The key difference is the WDA rate: 18% for main pool versus 6% for special rate pool. An asset costing £100,000 in the main pool gives £18,000 WDA in year one (leaving £82,000 pool balance), whereas the same asset in the special rate pool gives only £6,000 WDA in year one (leaving £94,000 pool balance). Use AIA on special rate assets first to avoid the 6% restriction.

How many years to fully write off a main pool asset using WDA?

Theoretically, a main pool asset is never fully written off under WDA alone because the reducing balance method always leaves a residual. However, after 10 years, the balance is approximately 15% of the original cost. After 20 years, approximately 2.5%. The small pool allowance (claim full balance if £1,000 or less) helps clear small residuals.

What records do I need for WDA pool calculations?

Keep: a schedule of all assets in each pool with their cost and date of acquisition; disposals with sale proceeds and date; the pool balance at start of each accounting period; WDA claimed each year; and any balancing allowances or charges. HMRC can request full pool calculations going back many years in an enquiry.

Can I not claim WDA in a year?

Yes. You are not obliged to claim the maximum WDA. You can choose to claim less (or zero) WDA in a year — for example, if your profits are low and claiming more allowances would create a loss that cannot be used efficiently. Any unclaimed allowance simply means a higher pool balance carries forward and more WDA is available in future years. There is no carry-back of WDA.

Does WDA apply to leased assets?

No. If you lease an asset (operating lease), the lessor claims the capital allowances, not the lessee. Your deduction is the lease rental payments. Only if you own the asset outright, or through hire purchase (finance lease), do you claim WDA. For finance leases, the lessee treats the asset as owned and claims allowances.

How does a disposal gain affect my WDA pool?

A disposal reduces the pool balance. There is no separate capital gain on disposal for assets in a pool — the entire gain/loss is absorbed into the pool calculation. If you sell an asset for more than its original cost, the disposal is capped at the original cost for pool purposes; any excess over original cost may be a chargeable gain instead.

What is the interaction between WDA and loss relief?

If WDA deductions create or increase a loss, that loss can be carried forward, carried back (limited), or offset against other income (depending on the business type and rules). Companies can carry back losses one year and carry forward indefinitely. Sole traders can offset WDA-created losses against other income or carry forward. Maximising WDA to create losses strategically can be a legitimate tax planning tool.

What is the annual investment allowance interaction with WDA pools?

AIA and WDA pools are separate claims. AIA is claimed on qualifying expenditure in the tax computation. Assets that receive AIA do not go into the WDA pool (their full cost has been relieved). Only the excess above the AIA limit (or non-qualifying assets like cars) enter the WDA pool. The pool balance at the start of each year represents assets whose cost has only been partially relieved.

Can the WDA create a loss below zero profits?

Yes. Capital allowances (including WDA) can reduce profits to zero or create a loss. For companies, trading losses can be carried back one year or carried forward indefinitely. For sole traders, losses can be offset against other income, carried forward, or in some cases offset against previous years. There is no restriction on creating losses through capital allowances alone.

How does WDA work for a company with associated companies?

Each associated company has its own capital allowances pools. WDA is calculated separately for each company at the applicable rates (18% main pool, 6% special rate). There is no sharing or transfer of WDA between associated companies unless assets are transferred between them (which triggers a disposal in one pool and an addition to another).

What is the 50% first-year allowance for companies (Full Expensing)?

From April 2023, companies (not individuals/partnerships) can claim 50% first-year allowance on special rate pool assets under Full Expensing, instead of 6% WDA. This front-loads relief significantly. The remaining 50% goes into the special rate pool and attracts 6% WDA in subsequent years. This applies only to new (not second-hand) assets acquired by companies.

How do I calculate pools for a period shorter than 12 months?

For accounting periods shorter than 12 months, the WDA is proportionally reduced. For example, for a 6-month period: main pool WDA = pool balance x 18% x 6/12 = 9%. This applies both to the annual WDA rate and to the AIA limit (which is also proportionally reduced). New businesses (first period) and businesses changing year-end frequently have short periods.

What is plant and machinery for capital allowances purposes?

Plant and machinery for capital allowances is broadly: movable assets used in the business, machinery, tools, equipment, computers, furniture, vehicles, and certain fixed assets that function as equipment rather than as part of the building structure. Whether something qualifies as P&M depends on case law and HMRC guidance. Items fixed to a building (fixtures) may qualify as plant if they serve the business process, not just the building.

Writing Down Allowance Calculator 2025/26

Calculate WDA on your plant and machinery pools. Main pool 18% reducing balance, special rate pool 6%. See your annual tax deduction and pools carried forward.

WDA Pool Calculator

Main Pool (18% WDA)

Main pool brought forward £

New main pool additions this year £

Main pool disposals this year £

Special Rate Pool (6% WDA) — integral features, long-life assets, cars >50g CO2

Special rate pool brought forward £

New special rate additions this year £

Special rate disposals this year £

Tax rate

Writing Down Allowance Explained

The Writing Down Allowance (WDA) is the annual tax deduction on the reducing balance of your plant and machinery pools. All eligible assets are grouped into pools and WDA is applied to the total pool balance each year.

Main Pool vs Special Rate Pool

The main pool (18% WDA) covers most plant, machinery, IT, commercial vehicles, and low-emission cars. The special rate pool (6% WDA) covers integral features of buildings, long-life assets, and high-emission cars. Always use AIA on special rate assets first — otherwise you only get 6p of relief per year for every £1 of cost.

Small Pool Allowance

If your main pool balance drops to £1,000 or less (after additions and disposals), you can claim the entire balance as a small pool allowance rather than just 18%. This clears the pool and avoids carrying forward tiny sums indefinitely. No equivalent exists for the special rate pool.