What is writing down allowance and how is it calculated?
Answered 11 March 2026
Writing Down Allowance (WDA) — What It Is and How It Is Calculated
What the law says
Nature of the allowance
A Writing Down Allowance (WDA) is a depreciation allowance available under the capital allowances regime for plant and machinery. It is calculated as a specified percentage of the qualifying expenditure pool, and the taxpayer may claim it in whole or in part. The qualifying expenditure pool is then reduced each year by the allowances claimed.
The statutory rates (CAA 2001, as amended)
The core WDA rates are set in CAA 2001 s.56 (main pool) and s.104D (special rate pool), as amended by successive Finance Acts:
- Main pool: The rate was reduced from 25% to 20% by FA 2008, and subsequently reduced again from 20% to 18% by a later Finance Act amendment to s.56(1).
- Special rate pool: The rate was reduced from 10% to 8% and then further reduced from 8% to 6% by amendment to s.104D(1), with effect for chargeable periods beginning on or after 1 April 2019 (corporation tax) or 6 April 2019 (income tax).
- Ring fence trades: A higher rate of 25% applies to qualifying expenditure incurred wholly for the purposes of a ring fence trade subject to the supplementary charge.
The calculation formula
The WDA is calculated on the amount by which AQE (Available Qualifying Expenditure) exceeds TDR (Total Disposal Receipts) for the chargeable period. The standard formula is therefore:
WDA = (AQE − TDR) × applicable percentage rate
Short/long accounting periods
Where the chargeable period is more or less than a year, the WDA is proportionately increased or reduced.
Small pools
Under CAA 2001 s.56A (inserted by FA 2008), where the amount by which AQE exceeds TDR is £1,000 or less (the "small pool limit"), the person is entitled to write off the entire balance as a WDA in that period, rather than applying the percentage rate. The £1,000 limit is itself proportionately adjusted for short/long periods or where the qualifying activity has been carried on for only part of the period.
Hybrid rates for straddling periods
Where a chargeable period straddles a rate change date, a hybrid (blended) rate must be applied, calculated by apportioning the old and new rates by the number of days before and after the change date.
HMRC guidance / practice
Current rates confirmed
HMRC confirms the current rates as 18% for the main pool and 6% for the special rate pool.
What goes into each pool
HMRC guidance confirms that expenditure on items such as solar panels, electrical systems (integral features) and similar assets goes into the special rate pool (attracting 6% WDA), while general plant and machinery such as laptops goes into the main pool (attracting 18% WDA).
Hybrid rate — worked example
HMRC illustrates the hybrid rate calculation as follows: a business with a 1 January–31 December 2019 accounting period and £20,000 in the special rate pool must apply:
[95/365 days @ 8%] + [270/365 days @ 6%] = 6.53% Maximum WDA = £20,000 × 6.53% = £1,306
Where the hybrid rate produces more than two decimal places, it is rounded up to the nearest second decimal place.
Subsequent periods — full allowance assumption
For the purpose of calculating WDA in a subsequent period, HMRC confirms that the calculation proceeds as if the full allowance had been given in the earlier period, even if a lesser amount (or nothing) was actually claimed.
Interaction with other allowances
WDA is the "fallback" allowance. Businesses will typically first claim the Annual Investment Allowance (100% up to the annual limit) or full expensing/first-year allowances where available; only expenditure not covered by those allowances is added to the relevant pool and relieved via WDA at 18% or 6% per year.
Summary table
| Pool | Statutory provision | Current WDA rate |
|---|---|---|
| Main pool | CAA 2001 s.56(1) | 18% |
| Special rate pool | CAA 2001 s.104D(1) | 6% |
| Small pools (≤ £1,000) | CAA 2001 s.56A | 100% (full balance) |
| Ring fence trade (main) | CAA 2001 s.56(1A) | 25% |
Citation sources
In its accounting period ending 31 December 2024, Hunter and Ball Ltd incurs the following expenditure on plant and machinery: £250,000 on new laptops; £600,000 on new solar panels; and £500,000 on a new electrical system for the business premises. The expenditure on laptops is available for full expensing (CA23174A), the Annual Investment Allowance (AIA) (CA23080) or main rate Writing-Down Allowances (WDAs) (CA23200). The expenditure on the solar panels and the electrical system is eligible for
Any writing-down allowance for a subsequent accounting period of the company in respect of such notional qualifying expenditure is calculated as if an allowance had been made of an amount equal to the full allowance, whether or not that amount, or any amount, was in fact claimed.
A business draws up accounts for the period 1 January 2019 to 31 December 2019. It has no new expenditure but has carried forward £20,000 in the special rate pool. Because of the change in writing down allowance it must apply a hybrid rate. This is calculated as follows (Note the apportionment must be made in days: There are 365 days in 2019.) The hybrid rate will be: [95/365 days before 6 April 2019 @ 8%] + [270/365 days on and after 6 April 2019 @ 6%=] = 6.53% The maximum writing down allowanc
The following example was when the written down allowance for main rate pool was 25% and the special rate pool was 10%. The current rates are 18% and 6% respectively. Partex Ltd is a leasing company claiming capital allowances at 25% on its machinery and plant pool for the accounting period (AP) year ended 31 December 2005. The pool includes several ships, which are either non-qualifying or leased to non-tonnage tax companies. One of the leased ships in that pool (which originally cost £50m) bec
PART 1 Direct taxes Capital allowances Special rate expenditure on plant and machinery 31 1 Part 2 of CAA 2001 (plant and machinery allowances) is amended as follows. 2 In section 104D(1) (writing-down allowances in respect of special rate expenditure) for “8%” substitute “ 6% ” . 3 Accordingly, in— a section 56(2)(a), b the heading of section 104D, and c section 104E(1)(a), for “8%” substitute “ 6% ” . 4 The amendments made by subsections (2) and (3) have effect in relation to chargeable period
o reject the taxpayers’ case. It was open to find that the expenditure was not “on the provision of plant or machinery” yet still conclude the expenditure was capital in nature. The House of Lords decision in Tucker (HMIT) v Granada Mortorway Services Ltd. [1979] 1 WLR (Lord Wilberforce) explained how indicia to capital or revenue could point different ways and that previous authority had warned against applying formulae derived on one case to another. HMRC are right to point out that the divisi
Part 1 Charges, rates, allowances etc Capital allowances Plant and machinery writing-down allowances 10 1 Part 2 of CAA 2001 (plant and machinery allowances) is amended as follows. 2 In section 56 (amount of allowances and charges), in subsection (1) for “20%” substitute “ 18% ” . 3 In section 104D (writing-down allowances: special rate expenditure)— a in subsection (1) for “10%” substitute “ 8% ” , and b after that subsection insert— 1A But, in relation to special rate expenditure incurred whol
Part 3 Capital allowances Plant and machinery: writing-down allowances and pools Small pools 81 1 CAA 2001 is amended as follows. 2 In section 56(2) (amount of allowances and charges), before paragraph (a) insert— za section 56A (small main pools and special rate pools), . 3 After section 56 insert— Writing-down allowances for small pools 56A 1 This section applies in relation to the main pool and the special rate pool. 2 Where the amount by which AQE exceeds TDR is less than or equal to the sma