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HMRC internal manual

Capital Allowances Manual

Plant & Machinery Allowances (PMA): Long-life assets: Long-life asset pool

CAA01/S101 - S102

Legislation was introduced in Finance Bill 2008 to increase the rate of writing down allowances (WDA) on long-life assets from 6% to 10%.

  • For businesses within the charge to corporation tax, this affected the calculation of WDA for chargeable periods ending on or after 1 April 2008 (the “operative date”); and
  • for businesses within the charge to income tax, this affected the calculation of WDA for chargeable periods ending on or after 6 April 2008.

 

Long-life asset pools ceased to exist for all accounting periods starting on or after the operative date. Any unrelieved expenditure in the long-life asset pool was, for chargeable periods starting on or after the operative date, allocated to the special rate pool. FA 2011 reduces the rate of the special rate pool to 8% from 1 April 2012 for CT and 6 April 2012 for IT

Prior to the introduction of the new rules, expenditure on long-life assets was put into a separate pool. The long-life asset pool did not come to an end when the last long-life asset was sold. It continued until the actual trade ceased.

Writing down allowances were given on expenditure in the long-life asset pool on the reducing balance basis at a rate of 6%.

Long-life assets leased overseas, which would have qualified for writing down allowances at the 10% rate, were added to the long-life asset pool rather than the pool for assets leased overseas. This means that they qualified for allowances at the 6% rather than the 10% rate.