The super deduction — the 130% first-year allowance that dominated capital spending decisions in 2021 and 2022 — is gone, but it refuses to be history: it ended in April 2023, left a disposal tail that still bites today, and its successors have kept changing, most recently at the November 2025 Budget, which quietly cut the main writing-down rate to 14% and invented a new 40% allowance for the leasing industry. If your mental model of capital allowances was formed in the super deduction era, it is now two reforms out of date. Here is the current map — and the legacy trap for anyone selling super-deducted kit.
The disposal tail: selling super-deducted assets
First, the live legacy issue. Assets that claimed the 130% deduction carry a special rule on disposal: the sale proceeds trigger an immediate balancing charge — taxable income of (now) 100% of the apportioned proceeds, rather than the usual quiet deduction from the pool. Sell a £100,000 machine that enjoyed the super deduction and £100,000 of taxable profit appears in that year's computation, full stop. Companies churning 2021–22 vintage plant — vehicles fleets aside, which never qualified — are still generating these charges, and forecasts that treat asset sales as tax-free cash routinely miss them. The asset register should flag super-deducted items for exactly this reason.
What replaced it: full expensing, and the 2026 reshuffle
The current first-year landscape, after the Budget 2025 changes:
- Full expensing — permanent 100% first-year relief on new and unused main-rate plant and machinery, for companies only. Economically it matches the super deduction's effect at the 25% corporation tax rate (25p of tax saved per £1, immediately). Cars are excluded, second-hand kit is excluded, and assets bought for leasing are excluded;
- The new 40% first-year allowance — from January 2026, a partial FYA that goes where full expensing cannot: assets for UK leasing, and unincorporated businesses. New and unused main-rate assets only; a genuine opening for landlords of plant, hire businesses and partnerships that spent years locked out of the headline reliefs;
- The annual investment allowance — £1 million of 100% relief per year for any business including sole traders and partnerships, and covering second-hand assets, which full expensing does not. For most SMEs the AIA still does all the work on its own; shared across commonly-controlled companies;
- Targeted 100% FYAs — new zero-emission cars and EV chargepoint equipment (both currently to spring 2027), and the quietly generous research and development allowance: 100% on capital spend for R&D, the relief that funds laboratories and prototypes where the revenue R&D scheme funds the running costs;
- Structures and buildings allowance — 3% a year straight-line on construction costs of commercial buildings: slow, but real money on big builds and frequently unclaimed on fit-outs where nobody separated the qualifying elements.
The rate cut nobody noticed: WDAs at 14%
The same Budget that created the 40% FYA paid for it by cutting the main-rate writing-down allowance from 18% to 14% from April 2026 (with a blended rate for straddling periods; the 6% special rate is unchanged). Anything that misses a first-year relief — used equipment beyond the AIA, cars over 50g/km at neither extreme, pooled residue from earlier years — now writes off meaningfully slower: the pool takes roughly 15 years to reach 90% relieved instead of 11. The planning consequence is simple and sharpened: first-year reliefs are worth more than ever relative to the pool, so qualifying spend deserves routing through full expensing, the AIA or the 40% FYA wherever possible, and timing decisions (buy before year end versus after) carry more tax value than they did at 18%.
Choosing the right relief per pound
With five overlapping reliefs, allocation is now a real exercise: full expensing for companies' new main-rate kit (it consumes no AIA); AIA prioritised toward special-rate assets (where the alternative is a 50% FYA or a 6% crawl) and second-hand purchases; the 40% FYA for leased-out assets with the balance to the pool; and the specialist reliefs claimed where they fit. Order matters, claims are annual, and the difference between a considered allocation and software defaults on £2 million of mixed capex runs to tens of thousands in cash-flow terms. Add the disposal planning — super-deduction balancing charges, and full expensing's own immediate balancing charges on sale — and capital allowances have become a genuinely two-ended discipline: relief on the way in, exposure on the way out.
Acumon runs capital allowances reviews as part of corporation tax work — allocation across the reliefs, fit-out and property claims via our capital allowances specialists, and the disposal-side modelling that stops balancing charges ambushing forecasts. If your fixed asset register still assumes 18% pools and a live super deduction, both of those assumptions now cost money.