The UK government has introduced a new 40% first-year allowance (FYA) for capital expenditure from April 2026, replacing the annual investment allowance, while cutting the main writing-down allowance (WDA) rate from 18% to 14%.[6]
This change offers unrestricted claims on the FYA, potentially benefiting leasing firms and high-investment businesses by accelerating tax relief on assets like machinery and equipment. However, the WDA reduction will hit around 650,000 businesses with ongoing qualifying expenditure, slowing future deductions and increasing tax liabilities over time. Draft legislation in Finance Bill 2025-26 may see tweaks before enactment, per ICAEW analysis.[6]
What this means
UAE entrepreneurs with UK operations or cross-border investments should model cash flow impacts now—high-capex sectors may gain short-term relief, but plan for higher long-term taxes. QuickTax advises reviewing asset purchase timings to optimise relief under global tax strategies.