What the Budget means for business capital expenditure relief
The Chancellor’s Autumn Budget introduced several important changes to capital allowances that will shape investment decisions over the next few years. If you’re planning significant capital expenditure in 2026, here’s what you need to consider.
Main rate writing down allowance (WDA) cut
From April 2026, the writing down allowance (WDA) for main pool assets will fall from 18% to 14%. This means slower tax relief for assets that don’t qualify for upfront claims such as Full Expensing or the Annual Investment Allowance (AIA). Businesses relying on WDA for long-life assets or incremental spend should factor this into cash flow and tax planning.
New 40% first-year allowance
A new 40% first-year allowance will apply to qualifying main rate assets purchased from 1 January 2026. This is a significant development for leasing businesses and unincorporated entities, which were previously excluded from Full Expensing. While details are still emerging, this measure provides an upfront boost for sectors that traditionally faced slower relief.
What’s staying the same
The £1 million Annual Investment Allowance remains in place, continuing to offer full relief for qualifying expenditure up to that threshold. Full Expensing for limited companies also remains unchanged, preserving one of the most generous allowances in the current regime.
Electric vehicles and charging infrastructure
The 100% first-year allowance for zero-emission vehicles and EV charge points has been extended to April 2027, reinforcing the government’s commitment to green investment. Businesses planning fleet upgrades or charging infrastructure should take advantage of this window.
The takeaways
- There is more incentive than ever to claim relief in the year of spend, rather than relying on slower WDA deductions.
- Leasing businesses and partnerships gain a new opportunity through the 40% allowance, but clarity on qualifying conditions will be crucial.
- With EV incentives extended, sustainability-led investments remain attractive but timing matters.
If you’re planning major capital expenditure, now is the time to review your strategy. Understanding how these changes interact with your business structure and investment plans can help maximise relief and avoid missed opportunities.
We’re here to help
Get in touch with our capital allowances specialists to ensure your plans are tax-efficient and aligned with the new rules.