Capital Allowances: Writing Down Allowances (WDA) Explained

We sat down with Anastasiya Kokonova MRICS, Capital Allowances Partner at RCK Partners, to explore a key capital allowance: Writing Down Allowances (WDA).

While some capital allowances provide immediate relief, such as the Annual Investment Allowance (AIA) or Full Expensing, when claiming WDA, not all qualifying expenditure can be relieved in the year it is incurred. Writing Down Allowances allow businesses to claim tax relief gradually over time on qualifying plant and machinery expenditure that has not been fully relieved under other allowances.

In practice, WDAs apply to many types of capital expenditure, including fixtures within commercial property, equipment, and long-life assets. Understanding how WDAs work is particularly important for businesses undertaking property acquisitions, refurbishments, or capital investment projects where expenditure exceeds the AIA limit or does not qualify for first-year relief.

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^{More on Anastasiya Kokonova:}

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Anastasiya is a Chartered Quantity Surveyor with 16 years of experience in the Capital Allowances sector. Prior to specialising in Capital Allowances, Anastasiya worked as a Quantity Surveyor for 3 years at a large QS firm,gaining experience in both new-build and fit-out projects. Anastasiya has provided Capital Allowances advice and undertaken claims on hundreds ofproperties and commercial transactions, and has advised a wide variety of property investors across sectors, including high-net-worth individuals, hoteliers, retailers, media, investment companies, and owner-occupiers. Anastasiya holds a Masters Degree in Corporate Real Estate Finance and Strategy.

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^{See the conversation on Writing Down Allowances below:}

_{What are Writing Down Allowances (WDA)?}

Writing Down Allowances allow businesses to claim tax reliefon qualifying capital expenditure over time where the cost has not been fully relieved under Annual Investment Allowance (AIA) or other first-year allowances.

^{How do Writing Down Allowances work in the UK?}‍

Qualifying expenditure is allocated to capital allowance “pools”, and a percentage of the remaining balance is deducted each year on a reducing balance basis.

^{What is the difference between AIA and Writing Down Allowances?}

The main difference is that AIA provides 100% tax relief inthe year the expenditure is incurred, whereas Writing Down Allowances provide tax relief gradually over time. AIA must be claimed in the year of expenditure, while WDAs can also apply to historical expenditure where AIA or other first-year allowances could not be or were not claimed.

^{What is the current Writing Down Allowance rate in the UK?}

Currently, 18% for the main pool (reducing to 14% in April 2026) and 6% for the special rate pool.

^{Why are Writing Down Allowances calculated on a reducing balance basis?}

WDAs are calculated on a reducing balance basis so that tax relief is spread over the useful life of the asset. They also apply where expenditure does not qualify for Full Expensing (for example where assets are second-hand) or where AIA cannot be claimed because the annual limit has been exceeded or the claim is out of time.

^{What are capital allowance pools and how do they affect WDAs?}

Capital allowance pools group together qualifying assets (for example the main pool or special rate pool). The relevant WDA percentageis then applied to the remaining balance of each pool each year.

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_{What assets qualify for the special rate pool at 6%?}

Assets such as integral features within buildings (e.g.electrical systems, lighting, heating, lifts and air-conditioning), long-lifeassets and certain thermal insulation.

^{How are long-life assets treated for Writing DownAllowances?}

Long-life assets (typically with an expected useful life of 25 years or more) are allocated to the special rate pool and attract WDAs at the lower rate.

^{Are integral features eligible for Writing Down Allowances?}

Yes. Integral features within commercial property generally qualify for capital allowances and are allocated to the special rate pool. If they do not qualify for AIA or first-year allowances, relief can be claimed through Writing Down Allowances.

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^{How do you calculate Writing Down Allowances?}

The relevant WDA percentage is applied to the tax written down value of the relevant capital allowance pool at the end of each accounting period on a reducing balance basis.

^{Can you claim Writing Down Allowances every year?}

Yes, WDAs can be claimed annually until the balance of thepool is fully relieved.

^{How do Writing Down Allowances interact with Full Expensing?}

^‍Full Expensing provides 100% first-year relief for qualifying new plant andmachinery for companies. If expenditure does not qualify for Full Expensing (for example because the asset is not new), or if the claim is out of time as Full Expensing must be claimed in the year of expenditure, the cost can instead be claimed through Writing Down Allowances so the entitlement to tax relief is not lost.

^{How do Writing Down Allowances apply to commercial property fixtures?}

Fixtures within commercial properties are relieved through Writing Down Allowances where other allowances such as AIA or first-year allowances are notavailable.

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^Conclusion

Writing Down Allowances continue to play an important role in helping UK businesses obtain tax relief on capital expenditure that cannot be claimed under AIA or other first-year allowances. By providing relief overtime, WDAs ensure that businesses can still benefit from capital allowances ona wide range of qualifying assets.

We encourage businesses to start a conversation around Writing Down Allowances and whether they are being fully utilised. At RCK Partners, we would be happy to support further discussions around how WDAs andother capital allowances may apply.

For more information or to continue the conversation, click here.

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