Key facts
- The main rate pool receives a writing down allowance (WDA) of 18% per year on a reducing-balance basis.
- The special rate pool receives a WDA of 6% per year on a reducing-balance basis.
- Cars are allocated to pools based on CO2 emissions: zero-emission (100% FYA), ≤50 g/km (main pool), >50 g/km (special rate pool).
- If the pool balance falls to £1,000 or less, the entire amount can be written off under the small pools allowance.
How Writing Down Allowances Work Over Time
Writing down allowances (WDAs) are annual tax deductions calculated on a reducing-balance basis. They apply to plant and machinery expenditure that has not been fully relieved by the Annual Investment Allowance (AIA) or first-year allowances.[1]
WDAs are claimed each year on the balance of the capital allowance pool, gradually reducing the unrelieved expenditure over time.
Rates and Pools
Assets are allocated to one of two main pools, each with a different WDA rate:[2]
| Pool | WDA Rate | Assets Included |
|---|---|---|
| Main rate pool | 18% | Most plant & machinery, fixtures, tools, low-emission cars (≤50 g/km CO2) |
| Special rate pool | 6% | Integral features, long-life assets (25+ year useful life), thermal insulation, cars with CO2 >50 g/km |
Integral Features
The following are classified as integral features and must go into the special rate pool:[2]
- Electrical systems (including lighting systems)
- Cold water systems
- Space or water heating systems
- Powered systems of ventilation, air cooling, or air purification
- Lifts, escalators, and moving walkways
- External solar shading
Cars and CO2 Emissions
Cars receive special treatment and are never eligible for AIA. Instead, they are allocated based on their CO2 emissions:[4]
| CO2 Emissions | Allowance | Rate |
|---|---|---|
| 0 g/km (fully electric / zero-emission) | 100% first-year allowance | 100% in year 1 |
| 1–50 g/km | Main rate pool WDA | 18% |
| >50 g/km | Special rate pool WDA | 6% |
Tip: For a company car with CO2 emissions above 50 g/km, only 6% of the reducing balance is deductible each year. It takes over 10 years to relieve most of the cost. Consider whether a zero-emission vehicle (100% FYA) would be more tax-efficient.
How the Reducing Balance Works
Each year, the WDA is calculated on the tax written-down value (TWDV) — the pool balance after previous allowances and any additions or disposals:[3]
| Year | Opening TWDV | WDA (18%) | Closing TWDV |
|---|---|---|---|
| 1 | £100,000 | £18,000 | £82,000 |
| 2 | £82,000 | £14,760 | £67,240 |
| 3 | £67,240 | £12,103 | £55,137 |
| 4 | £55,137 | £9,925 | £45,212 |
| 5 | £45,212 | £8,138 | £37,074 |
Because the allowance is calculated on the reducing balance, the deduction gets smaller each year. Assets are never fully written off through WDAs alone — unless the small pools allowance is used. Online CT600 software does the reducing-balance arithmetic for you.
Short-Life Assets & Small Pools Allowance
Short-Life Asset Elections
If a company expects to dispose of an asset within about 8 years, it can elect to put it in a single asset pool (a “short-life asset” election). This means:
- The asset is tracked separately from the main pool
- When the asset is disposed of, a balancing allowance can be claimed if the disposal value is less than the pool balance — giving faster relief
- If the asset is still owned after 8 years, it is transferred into the main pool at its written-down value
Small Pools Allowance
If the closing balance of the main rate pool or special rate pool is £1,000 or less, the company can write off the entire remaining balance as a WDA in that period (rather than continuing to claim 18% or 6% of a tiny amount).[3]
Short accounting periods: WDAs are reduced proportionally for accounting periods shorter than 12 months. For a 6-month period, the main pool WDA is 9% (half of 18%) and the special rate WDA is 3% (half of 6%).[2]
Frequently Asked Questions
What are writing down allowances?
Writing down allowances (WDAs) are annual tax deductions calculated on a reducing-balance basis for plant and machinery that has not been fully relieved by the Annual Investment Allowance or first-year allowances.
What is the writing down allowance rate?
The main rate pool receives 18% per year on a reducing balance. The special rate pool (integral features, long-life assets, and higher-emission cars) receives 6% per year.
How are cars treated for capital allowances?
Zero-emission cars qualify for 100% first-year allowance. Cars with CO2 emissions of 1–50 g/km go in the main pool (18% WDA). Cars emitting over 50 g/km go in the special rate pool (6% WDA). Cars are never eligible for AIA.
What is the small pools allowance?
If the closing balance of the main rate or special rate pool is £1,000 or less, the company can write off the entire remaining balance in that period instead of continuing to claim 18% or 6% of a small amount.
Further Reading
- Capital Allowances Overview — all types of allowance at a glance
- Annual Investment Allowance (AIA) — 100% relief on up to £1 million
- Full Expensing — unlimited 100% FYA for companies on new assets
- Structures & Buildings Allowance — 3% straight-line relief on commercial buildings
- Balancing Charges & Disposals — what happens when pool assets are sold
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