A change to the tax relief on equipment sent a Chessington business rushing to buy before April. The rush, it turned out, was aimed at the wrong purchase.
A quote sits on your desk for a substantial piece of kit, the sort of purchase you make once every few years. Your year end is weeks away, and someone has mentioned that the tax relief on equipment is being cut from April. So the question forms itself: should you push the order through now, before the door closes? You run an asset-heavy business in Chessington, and you want the machine regardless. This is not about whether to buy. It is about when, and about whether waiting a few weeks would quietly cost you money in tax. It is a sensible question. The answer is just not quite the one the headline suggests.
At a glance
- The main-rate writing-down allowance fell from 18% to 14% from April 2026.
- But most equipment purchases still attract 100% relief in year one, through the Annual Investment Allowance, up to £1 million, or, for companies, full expensing.
- The rate cut mainly affects cars, second-hand assets and large existing pools, not a typical new-equipment purchase.
- A new 40% first-year allowance from January 2026 helps unincorporated businesses and assets bought for leasing.
- Where an accounting period straddles the change date, a blended rate applies, and the tax tail should inform the decision, not drive it.
When should I buy equipment to get the most tax relief?
It depends on the asset. Most new plant and machinery attracts 100% relief in the year of purchase, through the Annual Investment Allowance or full expensing, so timing makes little difference and you should buy when the business needs it. Timing matters mainly for cars, second-hand assets and spending beyond the £1 million allowance, where the answer should be modelled against your own year end rather than assumed.
Two questions people usually ask next:
Is capital allowances relief being cut in 2026?
The main-rate writing-down allowance was cut from 18% to 14% from April 2026. But this only affects assets relieved through the pool, such as cars, second-hand assets and large brought-forward balances. Purchases covered by the Annual Investment Allowance or full expensing still get 100% relief.
Does the writing-down allowance change affect my van or car?
A van is plant and machinery and normally qualifies for 100% relief through the Annual Investment Allowance or full expensing, so the rate change does not affect it. A car cannot use those reliefs and relies on writing-down allowances, so the reduction from 18% to 14% does affect the relief on a main-rate car.
Those are the headlines. Why a Chessington operator’s instinct to rush the big purchase before April was aimed at the wrong asset is where the useful detail lies.
The fear, and the reality
The headline is true as far as it goes. From April 2026 the main rate of writing-down allowance dropped from 18% to 14%. What the headline leaves out is that, for most businesses buying most equipment, the writing-down allowance is not the relief that applies in the first place.
That new machine on the quote is, in all likelihood, covered in full in the year you buy it, whenever that is. The Annual Investment Allowance gives 100% relief on most plant and machinery up to £1 million a year, and its limit is unchanged. Companies buying new and unused main-rate equipment can use full expensing instead, which also gives 100% and has no cap. In either case the relief is immediate and complete, so rushing the purchase across the year end to beat a change in the writing-down rate gains nothing at all. The urgency, in the way it was first felt, was misplaced.
This is worth pausing on, because acting on the wrong version of a rule wastes effort and, occasionally, money.
Where the cut actually bites
The reduction from 18% to 14% is real, and for the businesses it touches it matters. It simply touches a narrower set of things than the headline implies.
Writing-down allowances are the mechanism for assets that cannot get one of the accelerated reliefs above. In practice that means cars, which never qualify for the Annual Investment Allowance or full expensing, second-hand assets bought by a company that cannot use full expensing, and any spending that falls into the main pool once the £1 million allowance has already been used up elsewhere. It also means the large balances many asset-heavy businesses carry forward from earlier years, which will now unwind more slowly. HMRC estimates around 650,000 businesses are affected in this way. If most of your relief comes through the pool rather than up front, the change gently lengthens the time it takes to get that relief, which is a genuine cost even though no single year looks dramatic.
The reliefs, and how they fit together
The regime has become a set of overlapping reliefs, and choosing well means knowing which one reaches your particular purchase.
The 40% first-year allowance is the genuinely new piece, introduced from January 2026. It was designed to fill a gap, reaching businesses that could never use full expensing, in particular unincorporated businesses and firms buying assets to lease out. Where it applies, it changes the timing question in an unexpected direction: for some purchases, waiting until the new allowance was available was the better move, not rushing to beat a deadline.
The first thing we do is ask what the asset actually is, because the whole answer turns on it. For a new machine inside the annual allowance, buy it when the business needs it and stop worrying about the date, the relief is the same either way. It is the car, the second-hand item, the spend beyond the million, that is where timing earns its keep. Most people are rushing the one purchase where it makes no difference, and overlooking the one where it does.
Donovan Crutchfield, ACA, Area Managing Partner, Xeinadin Richmond
When timing genuinely changes the answer
For the Chessington operator, the big machine was a red herring. It sat comfortably within the Annual Investment Allowance and would be fully relieved whenever the order went in, so the year-end deadline had no bearing on it.
The place timing did matter was elsewhere in the plan. The business was also replacing a low-emission company car, which can only ever attract writing-down allowances, and there the change from 18% to 14% did affect how quickly the relief came through, making the earlier side of the April date marginally better for that one item. And because the year’s spending had nearly exhausted the £1 million allowance, further new equipment would have dropped into the pool, where the new 40% first-year allowance, available from January, was worth having rather than racing past. One more detail applied: because the accounting period straddled the change date, a blended rate governed the pool for that year, sitting between the old and new figures rather than snapping straight to 14%. None of this is complicated once it is laid out. It is simply specific, and it rewards looking at the actual assets rather than a general sense of alarm.
Deciding well, not just quickly
The operator bought the machine on the timetable the business wanted, not the tax calendar, brought the car purchase forward by a few weeks where it was easy to do so, and held the remaining equipment spend into the new period to make use of the newer allowance. The tax was optimised around the commercial plan, which is the right way round. A purchase timed purely to chase relief, on kit the business did not yet need, would have tied up cash for a saving that, in this case, was not even there.
That is the real discipline behind every capital decision: model the cash and the tax together, and let the tax inform the choice without letting it drive it. The same instinct runs through our case study on how a Kingston engineering firm discovered its loan account problem at year end, where a year-end decision looked fine in isolation and only made sense once the cash position was seen whole.
If you have a significant purchase in view, it is worth a short conversation before you commit. Our tax planning and business advice teams, who work with property, construction and other asset-heavy businesses across Chessington, Richmond and Surrey, can model the timing against your own year end and cash position, so the decision is made on the whole picture rather than a headline.
More common questions
What is the difference between the AIA and full expensing?
Both give 100% relief in year one. The Annual Investment Allowance is capped at £1 million a year and is available to most businesses, including unincorporated ones, and covers second-hand assets. Full expensing is uncapped but is only for companies buying new and unused main-rate plant and machinery.
What is the 40% first-year allowance?
It is a new allowance from January 2026 giving 40% relief in the year of purchase on qualifying main-rate expenditure, with the balance relieved through writing-down allowances. It was designed to help businesses that cannot use full expensing, particularly unincorporated businesses and assets bought for leasing. It does not apply to second-hand assets or cars.
My accounting period straddles April 2026. How is my allowance worked out?
A blended rate applies for that period. It is calculated from the proportion of days falling before and after the change date, so the pool rate for the year sits between 18% and 14% rather than snapping straight to the lower figure. Your accountant will apply the correct hybrid rate on your return.
Key takeaways
- For most new equipment, the Annual Investment Allowance or full expensing gives 100% relief whenever you buy, so there is no need to rush the year end.
- The 18% to 14% cut bites on cars, second-hand assets and large existing pools. That is where timing genuinely repays attention.
- Model the cash and the tax together, and buy on the commercial timetable. The tax should inform the decision, not drive it.
ABOUT THE AUTHOR
Donovan Crutchfield, ACA, is Area Managing Partner at Xeinadin Richmond. He advises owner-managed and asset-heavy businesses across Chessington, Kingston, Richmond upon Thames and the wider South West London and Surrey area on timing significant decisions well, with the tax and the cash considered together. Connect with Donovan on LinkedIn
This case study is a composite, drawn from situations we see regularly across the area. It does not describe a single identifiable client, and any resemblance to a particular person or business is coincidental. It is general information, not advice for your circumstances. Capital allowances are detailed and the right treatment depends on your entity, your assets and your accounting period, so the figures and reliefs here should be confirmed against your own position before you act. For guidance tailored to you, please speak to us directly.
