At the autumn Budget, the chancellor confirmed a cut in the main rate of writing down allowances (WDAs) from 18% to 14% effective on 1 April 2026 for corporation tax, and 6 April 2026 for income tax.

HMRC has clarified the process for reporting chargeable period as many companies will not be reporting to a 31 March year end in new guidance issued on 1 April as the new system came into force.

This is a significant tax raising measure and will affect at least 650,000 companies in year one. It is set to raise an estimated £1bn in year one of operation in 2026-27, rising to £1.5bn in year two.

It will affect all new and pooled expenditure on plant and machinery assets eligible for writing down allowances, and new expenditure eligible for the new first year allowance (FYA), excluding second-hand assets and cars.