Tool Depreciation Calculator

AIA lets you deduct the full cost of qualifying plant and machinery (including tools) from your profits in the year of purchase. The current AIA limit is £1,000,000 per year - more than enough for most tradespeople. It provides an immediate tax saving.

Most tools, equipment, and machinery used in your trade qualify: power tools, hand tools, testing equipment, ladders, scaffolding, vehicles (different rules), computers, and mobile phones. Items must be used for business purposes.

WDA (14% of the reducing balance per year for the main pool, from April 2026 — it was 18% up to 5 April 2026) is used when you have exceeded your AIA limit, or for assets in the special rate pool (6% per annum) like integral features. The WDA rate itself does not depend on the accounting useful life or scrap value you enter — those only drive the straight-line accounting depreciation shown for your books. WDA is a reducing-balance allowance with no fixed term: it continues each year until the pool is written off or the asset is sold. To give a comparable figure, the calculator projects the WDA tax relief over the useful-life period you enter, so the Total Tax Relief and Effective Cost shown for the WDA method reflect that horizon rather than the full run-off of the pool. For most sole traders, AIA covers everything as the £1m limit is very generous.

Yes. A permanent 40% first-year allowance (FYA) for new main-rate plant and machinery applies to expenditure incurred from 1 January 2026. It lets you deduct 40% of the cost in year one, with the remaining 60% added to the main pool for normal writing-down allowances. For most tradespeople the AIA (100% in year one, up to the £1m limit) still gives better relief, so the 40% FYA mainly helps when AIA is already used up or does not apply (for example certain leased assets).

You can only claim the business-use proportion. If a tool is used 80% for business and 20% personal, you claim 80% of the cost. Keep records of business vs personal use, especially for items like vehicles and phones.

For tax purposes, you claim capital allowances (AIA/WDA), NOT accounting depreciation. They are separate concepts. Depreciation shows the economic cost over time, but HMRC uses capital allowances to determine your tax deduction.