What Is Writing Down Allowance on Cars?
Writing down allowance (WDA) is the method HMRC uses to give you tax relief on the cost of a business car over its useful life. Instead of deducting the full purchase price in one year, you claim a percentage of the car's value each year on a reducing balance basis. This applies to dentists who use a car for practice-related travel, whether you are an associate, practice owner, or locum.
For capital allowances purposes, a car is defined as a vehicle suitable for private use that was not built for transporting goods [1]. Motorcycles bought before 6 April 2009 do not count as cars for these rules [1]. The rate of WDA you can claim depends on the car's CO2 emissions and when you bought it.
If you are a sole trader or partnership using the cash basis of accounting, you can only claim capital allowances on business cars [2]. For most dentists operating through a limited company or on traditional accruals accounting, the standard capital allowance rules apply.
Current Writing Down Allowance Rates for Cars (2025/26)
For the 2025/26 tax year, there are three main categories of car for WDA purposes. The rates apply from 1 April for companies paying corporation tax and from 6 April for sole traders and partnerships paying income tax [1].
Main Rate Cars (18% WDA)
Cars with CO2 emissions of 50g/km or less qualify for the main rate writing down allowance of 18% per year on the reducing balance [1]. This category includes most hybrid cars and some of the more efficient plug-in hybrids. For example, if you buy a qualifying hybrid car for £30,000, you claim 18% (£5,400) in year one, leaving a written-down value of £24,600. In year two, you claim 18% of £24,600 (£4,428), and so on.
Special Rate Cars (6% WDA)
Cars with CO2 emissions above 50g/km fall into the special rate pool and attract a 6% writing down allowance per year [1]. This covers the vast majority of petrol and diesel cars used by dentists. A £25,000 diesel car would give you £1,500 relief in year one, then 6% of the remaining £23,500 (£1,410) in year two.
Zero-Emission Cars (100% First Year Allowance)
New and unused cars with CO2 emissions of 0g/km (fully electric cars) qualify for a 100% first year allowance [1]. This means you can deduct the entire purchase cost from your profits in the year of purchase. For cars with CO2 emissions of 50g/km or less, the main rate writing down allowance is 100% in the first year (first year allowance) and then 18% per annum on the reducing balance [3].
This 100% first year allowance for zero-emission vehicles (ZEVs) and chargepoints has been extended to 31 March 2027 for corporation tax purposes and 5 April 2027 for income tax purposes [4]. If you are a practice owner considering a new car, an electric vehicle could give you significant upfront tax relief.
Changes to Writing Down Allowance Rates from April 2026
The rules are changing. From 1 April 2026 for corporation tax and 6 April 2026 for income tax, the main rate writing down allowance will reduce from 18% to 14% [4]. This means cars that currently attract 18% WDA will only attract 14% from that date.
To preserve incentives to invest, a new first year allowance of 40% for main-rate assets is being introduced from 1 January 2026 [4]. This is a transitional measure designed to soften the impact of the rate reduction. If you are planning to buy a qualifying car, the timing of your purchase could affect how much tax relief you receive.
The special rate of 6% for cars above 50g/km CO2 remains unchanged for now, though the government keeps these rates under review.
How Writing Down Allowance Works in Practice for Dentists
Writing down allowance is claimed through your annual self assessment tax return (for sole traders, associates, and partners) or through your company's corporation tax return. You do not need to submit a separate form, but you must keep records of the car's purchase cost, date of purchase, and CO2 emissions.
If you use the car partly for private purposes, you must restrict the claim to the business-use proportion. For example, if you use your car 70% for practice-related travel and 30% for personal journeys, you only claim WDA on 70% of the cost. HMRC expects you to keep a mileage log or similar evidence to support your business-use percentage.
For dentists who are employees (such as salaried associates or foundation dentists), you cannot claim capital allowances on your own car. Instead, you claim mileage allowance payments from your employer, or if your employer provides a car, the benefit in kind rules apply. Associate tax specialists can help you determine which approach gives the best outcome.
Writing Down Allowance vs Annual Investment Allowance
Cars are generally excluded from the Annual Investment Allowance (AIA), which allows you to claim up to £1 million on certain plant and machinery [2]. The AIA covers dental chairs, X-ray equipment, compressors, and other practice equipment, but not cars. You must use the writing down allowance system for cars instead.
However, if an item qualifies for more than one capital allowance, you can choose which one to use [2]. For example, if you buy a zero-emission car that qualifies for both the 100% first year allowance and the main rate WDA, you would typically choose the first year allowance because it gives faster relief.
If you are buying a practice and need to understand how capital allowances apply to fixtures and equipment, our practice accounting services can guide you through the s.198 election process and ensure you maximise your claims.
Salary Sacrifice Car Schemes for Dental Practices
Some dental practices offer salary sacrifice car schemes to employees, including associates and nurses. Under these arrangements, the employee gives up part of their salary in exchange for the use of a car. The employer provides the car and claims the capital allowances, while the employee pays benefit in kind tax on the car's value.
By law, an employer can only make a deduction from someone's wages if it is required by law, the employment contract specifically allows the deduction, they overpaid someone by mistake, or the worker agreed in writing beforehand [5]. A salary sacrifice must not take a worker's pay below the National Minimum Wage [5].
Employee car-ownership schemes have been delayed and will now be brought within the scope of benefit in kind rules from 6 April 2030, with transitional arrangements until April 2031 [4]. If you are considering setting up a salary sacrifice scheme for your practice, take professional advice on the current rules.
Electric Cars and Future Tax Changes for Dentists
The government is encouraging the switch to electric vehicles through favourable tax treatment. The 100% first year allowance for zero-emission cars is a significant incentive for practice owners and self-employed dentists who need a new car.
However, changes are coming. From April 2028, a new mileage charge for electric and plug-in hybrid cars will be introduced, called Electric Vehicle Excise Duty (eVED) [4]. Electric cars will pay half the equivalent fuel duty rate for petrol and diesel cars, and plug-in hybrid cars will pay a reduced rate equivalent to half of the electric car rate [4].
For now, the benefit in kind rates for electric company cars remain very low, making them attractive for practice owners who want to provide a car to an associate or staff member. The tax position on electric cars is likely to remain favourable for several more years, but the direction of travel is towards gradually reducing those advantages.
Practical Steps for Dentists Claiming Writing Down Allowance
To claim writing down allowance correctly, follow these steps:
- Identify the car's CO2 emissions figure from the V5C registration document or the manufacturer's specifications.
- Determine whether the car qualifies for main rate (50g/km or less), special rate (above 50g/km), or first year allowance (0g/km).
- Calculate the business-use percentage based on your mileage records.
- Apply the correct WDA rate to the car's cost, then restrict for private use.
- Include the claim in your self assessment tax return or company tax computation.
If you sell the car or trade it in, you must account for the disposal in your capital allowances calculation. Any proceeds reduce the pool balance, and if the proceeds exceed the remaining pool value, a balancing charge arises which is added to your profits.
For dentists buying or selling a practice, the interaction between capital allowances on cars and the overall practice valuation can be complex. Our practice valuation services can help you understand how these factors affect the sale price.
Common Mistakes Dentists Make with Car Capital Allowances
One common error is claiming the full cost of a car under the Annual Investment Allowance. As noted above, cars do not qualify for AIA unless they are zero-emission and you choose the first year allowance instead.
Another mistake is failing to restrict the claim for private use. HMRC routinely challenges claims where the business-use percentage appears unrealistic. If you use your car for commuting to your practice and for personal journeys, you must apportion the claim accordingly.
Some dentists also forget that writing down allowance is claimed on the reducing balance, not the original cost. If you buy a car for £40,000 and claim 18% in year one (£7,200), the following year's claim is 18% of the remaining £32,800 (£5,904), not 18% of £40,000 again.
If you are unsure about your car capital allowance position, a dental accountant can review your records and ensure you are claiming the correct amount.
Summary of Key Dates for Car Capital Allowances
Here are the key dates every dentist should know:
- 1 January 2026: New 40% first year allowance for main-rate assets introduced [4].
- 1 April 2026 (companies) / 6 April 2026 (sole traders): Main rate WDA reduces from 18% to 14% [4].
- 31 March 2027 (companies) / 5 April 2027 (sole traders): 100% first year allowance for zero-emission cars ends [4].
- April 2028: Electric Vehicle Excise Duty (eVED) introduced [4].
- 6 April 2030: Employee car-ownership schemes brought within benefit in kind rules [4].
These dates affect your tax planning. If you are considering buying a new car for your practice, the timing of the purchase can make a material difference to your tax bill. Speak to a dental-specialist accountant to model the numbers for your specific situation.
For more detailed guidance on capital allowances and other tax reliefs available to dentists, visit our dental guides section or contact our team for a free practice health check.
Sources
- gov.uk: Claim capital allowances: Business cars - GOV.UK
- aka.hmrc.gov.uk: Claim capital allowances: Overview - GOV.UK
- icaew.com: Winners and losers from capital allowances changes - ICAEW.com
- accaglobal.com: Capital allowances and electric car changes - ACCA Global
- acas.org.uk: Making and checking deductions - Deductions from pay and wages