Capital allowances – new tool to calculate hybrid WDA rates

From April 2026, the main rate of writing down allowances (WDA) will reduce from 18% to 14%, with different effective dates for corporation tax and income tax. Where accounting periods span these dates, a hybrid rate will need to be applied to reflect both rates.

To help with this, HMRC has introduced a new online tool designed specifically to calculate the correct hybrid WDA rate.

• The tool helps businesses work out the blended WDA rate where periods straddle April 2026
• It removes the need for manual apportionment between the 18% and 14% rates
• It is designed to reduce complexity during the transition period
• It can be used directly via GOV.UK for affected accounting periods

This update is primarily about ease of calculation during the change, ensuring businesses can apply the correct relief without having to navigate the transitional rules manually.

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Verallo can help you assess the timing and structure of asset purchases and ensure you’re applying the correct allowances with confidence. Get in touch with our experts today.