Corporation Tax UK-wide

Claim capital allowances for your company

How to claim AIA, full expensing, and writing down allowances on your Corporation Tax return.

Guide summary

You can claim capital allowances to reduce your Corporation Tax bill by deducting the cost of certain assets from your taxable profits. First use the Annual Investment Allowance (AIA) for most plant and machinery up to £1,000,000 per year, then consider full expensing for new assets over that limit, and finally claim writing down allowances on remaining items.

  • Identify all qualifying assets you bought in the accounting period
  • Sort assets into main rate (18% WDA) or special rate (6% WDA) pools
  • Claim AIA first on special rate items, then main rate items
  • Full expensing gives 100% relief on new plant and machinery with no cap
  • Cars are not eligible for AIA or full expensing; use WDA based on CO2
  • Include capital allowances on your CT600 Corporation Tax return
  • Share the £1,000,000 AIA limit between all associated companies
  • Pro-rate AIA and WDA for accounting periods shorter than 12 months
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What are capital allowances

Capital allowances let your company deduct the cost of certain assets from its taxable profits, reducing your Corporation Tax bill. You cannot deduct the cost of buying an asset directly from your profits. Instead, you claim capital allowances through your CT600 return.

There are several types of capital allowance, each with different rates and rules. Claiming in the right order maximises your tax relief.

Full expensing for companies

Since April 2023, companies can claim full expensing on qualifying new plant and machinery. This is particularly valuable for large investments that exceed the AIA limit.

Writing down allowances

For expenditure not covered by AIA or full expensing (such as second-hand assets, cars, or amounts exceeding the AIA limit for unincorporated businesses), writing down allowances provide annual tax relief on a reducing balance basis.

  1. 1

    Identify qualifying expenditure

    Review purchases during the accounting period. Plant and machinery, computers, office furniture, tools, commercial vehicles, and business equipment generally qualify. Cars have separate rules based on CO2 emissions.

  2. 2

    Allocate to the correct pool

    Sort assets into pools: main rate (18% WDA) for most items, special rate (6% WDA) for long-life assets, integral features, and high-emission cars. Zero-emission cars get 100% FYA.

  3. 3

    Claim in priority order

    Claim AIA first on special rate pool items (to avoid the slow 6% WDA), then on main rate items. Consider full expensing for new assets where it provides greater benefit than AIA.

  4. 4

    Include on your CT600

    Complete the capital allowances computation as part of your Corporation Tax return. Most commercial accounting software calculates this automatically.

Cars and capital allowances

Cars have special capital allowance rules based on CO2 emissions:

  • Zero emissions (electric): 100% first-year allowance
  • 1-50 g/km CO2: Main rate pool (18% WDA)
  • Over 50 g/km CO2: Special rate pool (6% WDA)

Cars are excluded from both AIA and full expensing.

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