Calculating Hybrid Rate of Writing Down Allowance

Introduction

From April 2026, the main rate of writing down allowance for capital allowances is decreasing from 18% to 14%. If your accounting period straddles this date, you cannot simply use either the old or new rate — you must calculate a hybrid rate that reflects the proportion of your accounting period falling before and after the change.

What is the hybrid rate?

The hybrid rate is a blended writing down allowance rate you must use when your accounting period spans the date the allowance rate changed. This ensures you apply the correct rate for the portion of the year before the change (18%) and the portion after the change (14%).

The rate change takes effect on:

• 1 April 2026 for Corporation Tax
• 6 April 2026 for Income Tax

When you need to calculate a hybrid rate

You need to work out a hybrid rate if your accounting period includes the date when the writing down allowance rate changed.

For example:

• A limited company with an accounting period running from 1 January 2026 to 31 December 2026 would need a hybrid rate (the period includes 1 April 2026)
• A sole trader with a tax year running from 6 April 2026 to 5 April 2027 would not need a hybrid rate (the entire period is after the rate change)
• A company with a year end of 31 March 2026 would not need a hybrid rate (the entire period is before the rate change)

How to calculate your hybrid rate manually

You can calculate your hybrid rate by following these steps:

Step 1: Count the total number of days in your accounting period.

Step 2: Count the number of days from the first day of your accounting period up to (but not including) the day the rate changed.

Step 3: Divide the days before the rate change by the total number of days in your accounting period.

Step 4: Multiply this result by 18.

Step 5: Count the number of days from the day the rate changed to the end of your accounting period (include the day the rate changed in this count).

Step 6: Divide the days after the rate change by the total number of days in your accounting period.

Step 7: Multiply this result by 14.

Step 8: Add the result from step 4 to the result from step 7. If the answer has more than 2 decimal places, round up to 2 decimal places. This is your hybrid rate.

Worked example

A company paying Corporation Tax has an accounting period from 1 January 2026 to 31 December 2026.

The accounting period contains:

• 365 total days
• 90 days before 1 April 2026 (1 January to 31 March)
• 275 days from 1 April 2026 onwards (including 1 April itself)

Calculation for the period before the rate change:

90 ÷ 365 = 0.2466

0.2466 × 18 = 4.44

Calculation for the period after the rate change:

275 ÷ 365 = 0.7534

0.7534 × 14 = 10.55

Hybrid rate:

4.44 + 10.55 = 14.99%

The company would apply a writing down allowance rate of 14.99% to their main rate pool for this accounting period.

Using HMRC's online calculator

HMRC provides an online tool to calculate your hybrid rate automatically. You will need:

• Which tax you pay (Corporation Tax or Income Tax)
• The start date of your accounting period
• The end date of your accounting period

The calculator will work out your hybrid rate for you.

What to do with your hybrid rate

Once you have calculated your hybrid rate, use it to work out the writing down allowances you can claim on assets in your main rate pool (assets that qualify for the main rate of capital allowances, such as most plant and machinery).

Apply your hybrid rate to the value of your main rate pool at the start of the accounting period, plus any additions during the period, minus any disposals.

Accounting periods longer or shorter than 12 months

If your accounting period is longer or shorter than 12 months, you will need to make further adjustments to the amount of writing down allowances you can claim. The hybrid rate calculation remains the same, but additional calculations are required to proportion the allowances correctly.

This affects businesses that change their accounting date or are in their first or final period of trading.

Which assets does this apply to?

The hybrid rate applies to your main rate pool. This is where you group most plant and machinery and equipment that qualifies for capital allowances at the main rate.

Different rates apply to:

• The special rate pool (currently 6%)
• Single asset pools
• Assets that qualify for the Annual Investment Allowance or other enhanced allowances

The hybrid rate calculation only applies to main rate pool assets.

Sources

• Calculate your hybrid rate of writing down allowance

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.