Short-life asset elections

With the annual investment allowance (AIA) reducing to £200,000 with effect from 1 January 2016 it might be worth considering ‘de-pooling’ elections for expenditure in excess of these amounts if it is not on cars or integral fixtures and it is likely to be disposed off at a loss or scrapped within eight years of purchase.

The effect of the election is to put the item in its own pool. So for example an item costing £15,000 would after four years be written down to £6,782.

If scrapped the £6,782 can be claimed in the year of scrapping. Otherwise if the expenditure had not been depooled 18% WDA continue to be claimed for ever and a day until the company ceases trading.