Buying equipment: when to buy for the best tax relief
Buying equipment soon? See how much tax it saves before your year end, and how much just after.
Your answer
Enter what it costs and your profits this year and next.
About this calculator
For limited companies, sole traders and partnerships of individuals buying equipment, machinery, vans, building features or cars in 2026 and 2027.
What happens to your answers
We don’t keep them. Your answers go to our server to do the sums and aren’t stored or logged. If you copy a link to your answers, they’re in the link itself, so only share it with people you trust.
How it’s worked out
You claim tax relief on equipment (capital allowances) in the year you buy it. Most equipment gets the Annual Investment Allowance: the full cost, up to £1 million a year. Companies buying new equipment get full expensing, 100% with no limit, or 50% on integral features and long-life items. Sole traders get 40% on new equipment over the £1 million.
Cars don't get the Annual Investment Allowance. A new zero-emission car gets 100% if bought by 31 March 2027 (companies) or 5 April 2027 (sole traders); other cars get 14% a year (up to 50g/km) or 6% (over 50g/km). Buy on the last day of your year and you still get a whole year's allowance.
Buy before your year end and the saving comes off this year's tax bill: due 9 months and 1 day after the year end for a company, or 31 January after the tax year for a sole trader. Buy just after and it waits a year. If next year's profits are higher, the relief can be worth more then.
Worked example
Buying before your year end saves about £13,250 in tax, a year sooner than buying just after.
year to 31 March 2027, 12 months · no associated companies · £0 of the AIA used this year, none next year · bought on the last day or the first day
| What it costs | £50,000 |
|---|---|
| Before your year end: bought on 31 March 2027, in the year to 31 March 2027 | |
| Full expensing, 100% | £50,000 |
| Allowance that year | £50,000 |
| Corporation Tax on £120,000 of profits | £28,050 |
| Corporation Tax on £70,000 after the allowance | £14,800 |
| Tax saved (26.5% of the allowance), on the bill due 1 January 2028 | £13,250 |
| Just after it: bought on 1 April 2027, in the year to 31 March 2028 | |
| Full expensing, 100% | £50,000 |
| Allowance that year | £50,000 |
| Corporation Tax on £120,000 of profits | £28,050 |
| Corporation Tax on £70,000 after the allowance | £14,800 |
| Tax saved (26.5% of the allowance), on the bill due 1 January 2029 | £13,250 |
Worked out using HMRC's capital allowance rules and the Corporation Tax rates for financial year 2026.
Questions people ask
When do I count as having bought it?
On the date the contract becomes unconditional if you pay within 4 months. If payment is due later than that, it's the date payment is due. Hire purchase and leasing have their own rules: talk to us.
What happens if I sell it later?
What you sell it for is taken off your allowances, so selling something you claimed 100% on adds the sale price back to your profits (a balancing charge).
I'm a sole trader on the cash basis. Does this apply?
On the cash basis you deduct equipment (but not cars) when you pay for it, instead of claiming these allowances. The timing point is the same: pay before your year end and it counts this year.
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