Writing down allowance
A writing down allowance gives tax relief on capital assets over time rather than all at once: 18% a year on the main pool and 6% on the special rate pool, calculated on a reducing balance.
Also known as: WDA, capital allowance pools
How it works
Where spending does not qualify for the Annual Investment Allowance or full expensing — because a cap has been used, or the asset is a car, or it was bought for leasing — the cost goes into a pool and attracts a writing down allowance each year. The main pool gets 18%, the special rate pool 6%.
Cars are the common case for small companies. A car goes into the main pool at 18% if its CO2 emissions are low enough, or the special rate pool at 6% if not. New and unused zero-emission cars can attract a 100% first-year allowance instead, which is why electric cars are so often bought through a company.
Relief is on a reducing balance, so it never quite finishes: a £20,000 balance gives £3,600 in year one, then £2,952, and so on. Where a pool balance falls to £1,000 or less, a small pools allowance lets you write off the whole remainder in one go.
Disposals reduce the pool by the sale proceeds. Where proceeds exceed the pool, a balancing charge adds to taxable profit — which is a frequent surprise when a company sells a vehicle it had already claimed heavily on.
Worked example (2026/27)
£20,000 car in the main pool
| Year one at 18% | £3,600 |
|---|---|
| Balance carried forward | £16,400 |
| Year two at 18% | £2,952 |
| Balance carried forward | £13,448 |
Who this affects
- Companies buying cars, which never qualify for the Annual Investment Allowance
- Businesses spending beyond the £1,000,000 allowance in a year
- Companies acquiring second-hand special rate assets and integral features
- Anyone selling a pooled asset and facing a balancing charge
Common mistakes
- Expecting immediate relief on a car purchase
- Forgetting to reduce the pool on disposal
- Missing the small pools allowance on a residual balance under £1,000
Frequently asked questions
What is the writing down allowance rate?
18% a year for the main pool and 6% for the special rate pool, both on a reducing balance basis.
Which pool does a car go in?
The main pool at 18% where emissions are within the threshold, otherwise the special rate pool at 6%. New zero-emission cars can get a 100% first-year allowance.
What happens when I sell an asset?
The disposal proceeds are deducted from the pool. If they exceed the pool balance, the excess is a balancing charge added to taxable profit.
Can I write off a small balance?
Yes. Where a pool balance is £1,000 or less, the small pools allowance lets you claim the whole amount in that period.
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Reviewed by Waqas Sagar ACA FCCA FMAAT · Last reviewed 13 September 2026 · Figures for 2026/27 · About our practice
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