HMRC internal manual

Capital Allowances Manual

CA71100 - Know-how: Allowances: Pooling of qualifying expenditure

CAA01/S456, S459 - S460

Qualifying expenditure is pooled in order to calculate allowances and charges. Pooling means that all the qualifying expenditure is added together and allowances and charges are calculated by reference to the total. They are not calculated separately for each item of qualifying expenditure.

If a person carries on more than one trade there is a separate pool for each trade.

This is how you calculate the pool for a chargeable period. Start with the balance in the pool at the end of the previous chargeable period. Add any qualifying expenditure incurred in that chargeable period and any qualifying expenditure incurred earlier that has not already been added to the pool to it. This gives the pool balance for the chargeable period.

Example Doug’s accounting date is 24 May. He has a pool brought forward at 25 May 2004 of £20,000. In the year ended 24 May 2005 he incurs capital expenditure on know-how of £7,000 on 4 July and £8,000 on 31 October. His pool for the year ended 24 May 2005 is £20,000 + £7,000 + £8,000 = £35,000.