Is this calculator updated for the 2026/27 tax year?

Yes, all calculators are fully updated with the latest HMRC thresholds, personal allowances, and National Insurance rates for 2026/27.

Can I use this for official tax submissions?

These tools are for estimation and illustrative purposes only. For official tax returns, please consult a qualified accountant or reference HMRC directly.

Capital Allowances Calculator UK (2026/27): Full Expensing & £1m AIA

Capital Allowances Calculator

✓ Verified for 2026/27

Asset Purchase Details

Asset Purchase Cost

Allowance Category

Company Corp Tax Rate (%)

Tax Savings (First Year)

£12,500

reduces Corp Tax bill

Allowance Claimed

£50,000

100% of purchase cost

Net Effective Cost

£37,500

after tax relief

Asset Cost

£50,000

original purchase price

Capital Allowance Breakdown

Net Asset Cost £37,500

Corporate Tax Saved £12,500

Original Asset Cost £50,000

Net Cost 75%

Tax Saved 25%

ℹ️ UK Capital Allowances let businesses deduct the cost of capital assets (machinery, vehicles, tools, software) from their taxable profits. The Annual Investment Allowance (AIA) provides 100% tax relief on qualifying capital expenditure up to £1,000,000 per year.

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Verified for Accuracy (2026/27 Tax Year)

Fact-checked and audited by David Vance, CTA FCA, Chartered Tax Advisor & Accountant. Verified against official HMRC rules.

How We Calculated This

Input variables: Enter the relevant amounts, rates, or percentages in the form.
Real-time breakdown: The calculator applies HMRC rules and thresholds for the 2026/27 tax year to process the values.
Display outputs: The visual graphs, donut charts, and tables are compiled dynamically to show your net take-home and deductions.

Real-World Examples

Standard Scenario

A basic calculation applying standard UK tax bands and allowances.

Calculation runs based on standard HMRC rules.

With Pension or Deductions

Factoring in a percentage of salary sacrifice or pension contributions.

Deductions are calculated and adjusted accordingly.

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Frequently Asked Questions

What are capital allowances and how do they reduce company tax?

Capital allowances allow businesses to deduct the cost of capital assets (such as machinery, computers, tools, and vehicles) from their profits before calculating Corporation Tax. Since standard depreciation is not tax-deductible under UK law, capital allowances act as the statutory method for claiming tax relief on capital expenditure.

What is the difference between Full Expensing and the Annual Investment Allowance (AIA)?

The Annual Investment Allowance (AIA) provides 100% first-year tax relief on qualifying plant and machinery up to a limit of £1 million per year. It applies to both incorporated companies and unincorporated businesses (sole traders/partnerships). Full Expensing is a permanent incentive only available to Limited Companies, offering unlimited 100% first-year relief on new and unused main rate assets, and 50% first-year relief (First-Year Allowance) on special rate assets.

What are the writing down allowance (WDA) rates for special rate pools?

If an asset does not qualify for AIA or Full Expensing, it is written down over time: the Main Rate Pool (standard machinery, office equipment) has a Writing Down Allowance of 18% per year, and the Special Rate Pool (long-life assets, integral features of buildings like air conditioning, thermal insulation) has an allowance of 6% per year. These allowances are calculated on a reducing balance basis.