Two changes landed within four months of each other: a new 40% first-year allowance from 1 January 2026, and a cut in the main writing-down allowance from 18% to 14% in April. Together they change when a practice gets tax relief on a chair, a scanner or a four-surgery refit — and they change it most for practices that are not companies.
Article · 25 August 2026
Dentistry buys expensive things. A chair with delivery unit and light, an OPG or a CBCT scanner, an intraoral scanner, a mill, autoclaves, a compressor and suction plant, cabinetry, the practice management system, and every few years the surgery it all sits in. The tax treatment of that spending runs through the capital allowances rules, and those rules moved twice in 2026.
The headline is short. From 1 January 2026 there is a new 40% first-year allowance on new, unused main-rate plant and machinery. From 1 April 2026 for companies and 6 April 2026 for sole traders and partnerships, the main pool writing-down allowance dropped from 18% to 14%. The £1 million annual investment allowance is unchanged, and so is the 6% rate on the special rate pool.
There are four routes to relief on plant and machinery, and they sit in a deliberate order.
The 40% allowance was designed for businesses shut out of full expensing — leasing companies and, squarely, unincorporated ones. That is a large slice of dentistry: expense-sharing partnerships, NHS practices held personally, associates who own their own kit. For those practices it is the first first-year allowance on ordinary equipment they have ever had.
The split that matters is main rate versus special rate, because only main-rate spend can touch the 40% allowance and the two pools unwind at very different speeds.
Main rate covers the clinical kit and the loose fit-out: chairs and delivery units, X-ray, OPG and CBCT units, intraoral scanners and mills, autoclaves and washer-disinfectors, compressors and suction plant, cabinetry and furniture, computers and servers, movable partitioning.
Special rate covers integral features of the building — the electrical system, cold water system, heating, ventilation and air conditioning, and lifts. In a surgery refit this is never a rounding error: rewiring four surgeries to take modern equipment, and the air handling that goes with them, routinely runs to a third of the project. Special rate spend gets no 40% allowance, and if the AIA does not cover it the relief arrives at 6% a year. Companies do have a 50% first-year allowance on new special rate assets; unincorporated practices do not.
The planning point follows directly: when your spend exceeds the £1 million AIA, allocate the AIA to the special rate expenditure first and leave the main-rate kit to the 40% allowance. Do it the other way round and you strand the slowest-moving pounds in the 6% pool.
Take a four-surgery practice run as a partnership, refurbishing and adding a CBCT scanner in the year to 31 March 2027. The figures are illustrative, but the proportions are ordinary for a project of this size.
Allocating the AIA to the equipment first — the instinctive order — absorbs the £920,000 of main-rate spend plus £80,000 of the integral features. The remaining £180,000 of special rate expenditure attracts 6%, or £10,800. Year-one allowances: £1,010,800.
Allocating the AIA to the integral features first absorbs all £260,000 of special rate spend plus £740,000 of equipment. The remaining £180,000 of new main-rate plant takes the 40% first-year allowance — £72,000 — and the 60% balance of £108,000 enters the main pool at 14%, giving £15,120. Year-one allowances: £1,087,120.
The difference is £76,320 of extra allowances, from nothing more than the order in which two boxes were ticked. For partners paying income tax at 40% with Class 4 National Insurance at 2% above £50,270, that is roughly £32,000 of tax deferred out of the year of spend. It is timing rather than a permanent saving — the relief arrives either way — but on a project funded by borrowing, timing is precisely what you are managing.
The rate cut only bites on expenditure that neither the AIA nor a first-year allowance absorbs, but that category has a very dental flavour to it: a used chair bought from a practice that is closing, a second-hand CBCT, or fixtures inherited with a practice purchase in a year when the AIA has already gone on something else. None of that qualifies for the 40% allowance, which is restricted to new and unused assets.
On a reducing balance, £60,000 in the main pool used to give £10,800 in year one. At 14% it gives £8,400. More to the point, a 14% reducing balance takes about 15 years to deliver 90% of the relief where 18% took roughly 12. If you are weighing a refurbished unit against a new one, the tax relief on the new unit now arrives materially sooner, and that belongs in the comparison alongside price and warranty. Our practice benchmarks guide covers where equipment spend sits against the rest of the cost base.
One more consequence: with periods that straddle the change, the rate is apportioned. A company with a 30 September 2026 year end gets six months at 18% and six at 14% — a hybrid rate of 16% for that period, not a clean 14%.
If you buy a practice that includes the freehold or a long leasehold, the price you pay carries fixtures within it — the electrical installation, the water and heating systems, sometimes plant that was never separately valued. Those can be worth a substantial capital allowances claim, and the rules are unforgiving about how you secure it.
The seller must have pooled the qualifying expenditure, and buyer and seller must jointly sign a section 198 election fixing the transfer value, within two years of completion. Miss that window and the allowances on those fixtures are lost permanently — not deferred, lost. The election value cannot exceed the seller's original cost or the sale price, and it is a negotiating point: a low figure suits the seller's balancing position and costs you relief.
This belongs in heads of terms, not in a scramble eighteen months later. Our guide to buying a dental practice sets out where it fits in the deal, and the squat practice guide covers the same ground for a build from scratch, where every pound of the fit-out is yours to allocate.
Capital allowances attach to the period in which expenditure is incurred, which is generally when the obligation to pay becomes unconditional — broadly on delivery and acceptance — rather than when the invoice is settled. A deposit paid in March for a scanner delivered in June sits in the later year for a 31 March year end, which is the wrong side of the line if you were counting on the relief.
Equipment bought on hire purchase is treated as owned from the start: the full capital cost qualifies once the asset is brought into use, while the interest element is an ordinary revenue deduction spread over the agreement. That is why an HP-funded scanner can produce a large allowance in a year when very little cash has actually left the practice. If you are pricing finance for a purchase, our finance page for dentists explains how we sequence the tax treatment before an introduction is made.
Capital allowances are one of the few areas of dental tax where the decision and the money are genuinely close together: the order of a claim, the wording of a quote, or a signature within two years of completion each moves real cash. If you have a refit, a scanner or a purchase in the next twelve months, talk to us before you commit to it rather than at the point the accounts are drawn up.
Deadlines coming up, rule changes that affect dentists, and one number worth checking — once a month, no spam.
No. Full expensing is available to companies only, and always has been, so a partnership or sole trader practice cannot use it. What you can use is the £1 million annual investment allowance, which gives the same 100% relief and covers new and second-hand assets alike, and from 1 January 2026 the new 40% first-year allowance on new, unused main-rate plant. That second one is genuinely new ground for unincorporated practices, which had no first-year allowance on ordinary equipment before. In practice the annual investment allowance still does the work for most practices, and the 40% allowance matters in the year your spend exceeds £1 million or the allowance is shared with connected businesses.
No, and it is not meant to be. The annual investment allowance gives 100% relief in the year of spend, so it beats 40% outright and should always be claimed first. The 40% allowance is the backstop for expenditure the £1 million allowance cannot reach — a large refit, a squat build, or a group where one allowance is divided between businesses under common control. Where both are in play, allocate the annual investment allowance to your special rate expenditure first, because that spend is otherwise stuck at 6% a year, and leave the main-rate equipment to the 40% allowance. The ordering is worth real money in a big year.
The annual investment allowance is available on second-hand assets, so if you have room within your £1 million the whole cost is relieved in the year of purchase. The 40% first-year allowance is not available: it applies only to new and unused plant. If your annual investment allowance has already been used, the second-hand scanner goes into the main pool and attracts 14% a year on a reducing balance, which is slower than the 18% that applied before April 2026. That does not make used equipment a bad buy, but it does mean the tax relief on a new unit now arrives significantly sooner, and the gap belongs in your comparison.
Both, apportioned. The main pool writing-down allowance fell from 18% to 14% on 1 April 2026 for corporation tax and 6 April 2026 for income tax, and a chargeable period straddling that date takes a hybrid rate based on how much of the period falls either side. A 30 September 2026 year end has six months before the change and six after, giving 16% for that period, with 14% applying in full from the following year. Sole traders and partnerships aligned to 5 April have a cleaner line: the year to 5 April 2026 is at 18%, and everything from 6 April 2026 onwards is at 14%.
Not in the way most people expect. Assets acquired under hire purchase are treated as owned from the outset, so the full capital cost qualifies for allowances once the asset is brought into use, not as the instalments are paid. The interest element is separate and comes off profit as an ordinary revenue expense over the term of the agreement. The effect is that an HP-funded purchase can generate a very large allowance in a year when barely any cash has left the practice, which is exactly why the finance decision and the tax position should be settled together rather than one after the other.
It is the joint election that fixes how much of a property price is treated as buying fixtures — the electrics, water and heating systems built into the building. Without one you generally cannot claim allowances on those fixtures at all. Two conditions apply: the seller must have pooled the expenditure, and buyer and seller must both sign the election within two years of completion. Miss the deadline and the relief is lost permanently rather than deferred. The figure is negotiable and pulls in opposite directions for the two sides, so it belongs in heads of terms alongside price, not in the post-completion tidy-up.
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