Tax relief on business investment remains generous, but it is becoming more nuanced. Understanding which relief applies, when to invest and how expenditure is structured is key to making the most of what is available.
At A&C Chartered Accountants, we focus on aligning commercial decisions with tax efficiency, rather than letting tax relief drive investment choices.
Annual Investment Allowance remains at £1 million
For 2026/27, the Annual Investment Allowance remains at £1 million, providing 100% relief on most qualifying plant and machinery.
This continues to exclude cars and may need to be shared between businesses in a group or between multiple businesses under common ownership.
Writing down allowances reduce
From April 2026, the main rate writing down allowance reduces from 18% to 14%, while the special rate remains at 6%.
This reduces long-term relief where first-year allowances are unavailable, making upfront planning more important.
New 40% first-year allowance
For qualifying expenditure incurred on or after 1 January 2026, a new 40% first-year allowance will be available.
This is most useful where the Annual Investment Allowance has already been used or is unavailable. Cars and second-hand assets remain excluded.
Electric vehicles and charging points
The 100% first-year allowance for new electric vehicles and electric charging points has been extended to April 2027, continuing to support lower-emission investment decisions.
Full expensing for companies
Limited companies can continue to claim full expensing, giving 100% relief on main rate assets and 50% on special rate assets.
This is particularly valuable for companies that do not have access to the Annual Investment Allowance.
Structures and Buildings Allowance
The Structures and Buildings Allowance remains at 3% per year and applies only to qualifying construction contracts signed after October 2018.
It suits some businesses better than others and should be reviewed carefully before relying on it as part of an investment strategy.
Taking a strategic approach
Investment reliefs remain attractive, but timing, classification and business structure all matter.