PMA: WDA & balancing adjustments: Available qualifying expenditure
This is how you calculate the available qualifying expenditure in a pool for a chargeable period. Start with the qualifying expenditure in the pool at the end of the previous chargeable period. This is sometimes called the pool brought forward. Add any qualifying expenditure incurred in the chargeable period for which AIA has not been claimed to the pool brought forward and also add the balance of expenditure qualifying for FYA in the previous chargeable period ( ie any balance there might be after having deducted FYA in the previous period). Then deduct disposal values for the chargeable period. The result is the pool of unrelieved expenditure for the chargeable period. Apply the appropriate percentage to this to get the WDA for the chargeable period. You then deduct that WDA from the pool for the pool for the chargeable period to get the pool to carry forward.
Example Michael and Peter have a pool brought forward of £12,000 at 1 January 2010. In the year ended 31 December 2010 they spend £8,000 on new computer equipment and sell a word processor for £4,000. They claim £ 8,000 AIA for the expenditure on the new computer. The pool for the year ended 31 December 2010is £12,000 - £4,000 = £ 8,000. The WDA available is £ 1,600 = 20% of £ 8,000. So the total allowances they claim are £8,000 plus £1,600= £9,600. If Michael and Peter claim WDA of £ 1,600 the pool carried forward at 31 December 2010 is £ 6,400. This is also the pool brought forward at 1 January 2011.