What is the 40% first-year allowance?
Qualifying new and unused main-rate equipment bought from 1 January 2026 can receive a 40% deduction upfront. Writing down allowances apply to the remaining 60% from the next accounting period. Cars are excluded.
These answers provide general information, not advice tailored to your circumstances. Rules can change and exceptions may apply — speak to the CASS team before making a tax, accounting or financial decision.
A partial upfront deduction
The 40% first-year allowance gives an upfront deduction for qualifying new and unused plant and machinery bought on or after 1 January 2026. The equipment must qualify for the main rate of writing down allowance, and cars are excluded. After the initial 40% deduction, the remaining 60% receives writing down allowances from the next accounting period. It can be relevant where an immediate full deduction is unavailable. For example, an eligible £10,000 purchase would give a £4,000 deduction upfront, with £6,000 remaining for later relief. Those are deductions from taxable profits, not cash refunds. CASS can check eligibility and compare it with AIA or other available allowances.
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