The 2025 Autumn Budget introduced two key changes to the capital allowances regime that will impact commercial property owners, investors, landlords, and any business investing in plant and machinery. These changes alter how tax relief can be claimed for qualifying expenditure, and could affect the timing and strategy behind your next property or refurbishment investment. 

What Are the Changes?

1. New 40% First-Year Allowance (FYA) for Main-Rate Assets 
   • From 1 January 2026, a new permanent FYA of 40% will apply to expenditure on qualifying main-rate assets. 
   • This is particularly useful where other allowances (like AIA or full expensing) are unavailable.

1. Writing-Down Allowance (WDA) Rate Reduced from 18% to 14% 
   • From 1 April 2026 (Corporation Tax) and 6 April 2026 (Income Tax), the annual WDA rate for main-pool plant and machinery will drop from 18% to 14%. 
   • Special-rate assets (e.g., integral features, certain long-life items) remain unaffected; the 6% rate for those continues unchanged. 

Why This Matters for Commercial Property Owners & Investors

• Faster Relief with FYA: For many investments, especially refurbishments or fit-outs, the new 40% FYA means a large portion of qualifying expenditure can be written off immediately, improving cash flow and reducing taxable profits in the year of investment. 
• WDAs Still Offer Value, But Slower: For older pools or when FYA/AIA are not used, ongoing relief is still available. The lower 14% rate simply means it will take longer to write down the same expenditure. 
• Strategic Planning Gains Importance: The Budget changes make the timing and structure of purchases or refurbishments more critical. Deciding when to incur costs (before or after 1 Jan 2026 / 1 Apr 2026) may affect how much relief you get and when. 
• Greater Relevance for Certain Sectors: Leasing businesses, unincorporated businesses, and investors not previously benefiting from accelerated allowances now have a renewed incentive, this change broadens the relief spectrum. 

What Should Commercial Property Owners Do Now

1. Review Planned Investments & Refurbs 
   • If you’ve planned capital expenditure, consider bringing it forward to benefit from the 40% FYA. 
   • Particularly relevant for office refits, new plant/ machinery, lighting, HVAC, security systems, kitchen/ sanitary upgrades, and other qualifying assets. 
2. Engage Our Capital Allowances Specialists Early 
   • Early involvement ensures correct classification of expenditure (main-rate vs special-rate), avoids missed claims, and helps to forecast effective tax savings. 
   • Mistaken classifications can lead to reduced or delayed relief. 
3. Coordinate With Your Company / Accounting Year-End 
   • For companies using Corporation Tax, the 1 Apr 2026 WDA change may affect relief timing. If your accounting period crosses that date, relief may be partly at 18% and partly at 14% (a “hybrid rate”). 
   • Plan your spending and claims accordingly, and adjust cash flow forecasts. 
4. For Leasing or Unincorporated Businesses, Reassess Leasing Assets 
   • The 40% FYA now applies where full-expensing / AIA may not. This boosts the attractiveness of qualifying new or replacement assets used in leasing. 

What This Doesn’t Change

• There is no change to the structure of special-rate allowances (still 6% WDA). 
• This is a timing and relief-structure change, not a new tax; the relief remains statutory under the Capital Allowances regime, replacing depreciation for tax purposes. 
• Cars, second-hand assets, and overseas leasing assets are excluded from the new FYA benefit. 

Pre-Budget vs Post-Budget Capital Allowance Treatment Comparison 

What This Means for You, and How CPA Tax Can Help

As a commercial property owner, investor, or manager, the Autumn Budget changes require a fresh look at your capital allowance strategy.

• If you’ve been planning a refurbishment or upgrading fixtures/fittings, now is the time to act. 
• Even if you missed claims in prior years, there may be opportunities to review historic unrelieved expenditure and maximise tax relief. 
• For projects crossing 2026, we can help you model and forecast the impact of the new allowance structure and plan accordingly. 

At CPA Tax, we specialise in navigating these kinds of legislative changes, helping clients identify qualifying expenditure, structure claims effectively, and secure maximum relief while staying compliant.

📩  If you’d like to explore the impact of the 2025 Budget on your portfolio or upcoming projects, get in touch for a no-obligation consultation.