SHort Life asset pool for the 2009/2010 tax year

pirate

Hi there

Have couple of quesitons re the Short Asset Pool

I know this is now not something companies would worry about since the full value of plant including SL assets up to 50K can be claimed in full so you wouldnt need to create a new pool. In the past this was done so that when the asset was disposed of and there was a balance full balancing allowances could be claimed.

But if you have a SL asset pool left over from the past with a WDV B/F amount and you sell it in the financial year 2009/2010 so you end up with a balance would you claim a balancing allowance to make the single asset pool zero and close it off?

In an example in the Osbourne book on page 3:13 there is a SL asset pool with a WDV b/f of 20,000 it is then sold for 13,000 leaving a balance of £7000. This is then subject to a balancing allowance of 7000 and therefore £7000 is claimed against capital allowances. This matches the text and explanation.

In the BPP book however on revision task 4 a SL asset pool of 17500 is WDV BF,
this asset was bought on the 7 August 2004 and disposed of on 19 Nov 2009, for 5000
accounting is done to 31 March.

In the answer the asset pool has a balance of 17500 which is transferred to the Main Pool. The disposal of £5000 is put against the main pool. and then WDAs are done accordingly on the main pool. What this effectively means is that 12500 is added to the main pool. I am assuming that this is because the asset was not disposed of within 4 years. ie bought on 7 August 2004 sold 19 Nov 2009 ie 5 plus years later. (I read it in the BPP book. but this is not covered at all in the Osborne book

Can someone tell me if this is correct?
Are there some other rules to SL assets that I need to be aware of
The only thing that I am aware of it that you may see a pre existing SL pool, a disposal may be made leaving a possible balance which can be claimed as a balancing allowance (or charge ) and counts towards your Capital allowance, or if it is not disposed of you calculate WDA at 20%. Nothing else is covered in the Osbourne book apart from to say that once disposed of any balance can be written off (or charged).
It seems there is a rule where it must be disposed of within 4 years and if so a balancing charge can be claimed and if its not disposed of within 4 years it has to be added to the main pool unless a depooling election is made. Not sure when the depooling election has to be made.
Is this rule still in place. Have I got the rule correct. is there an easy way to understand this

many thanks

Karen

val0123

I think a short life asset election can still be made. It would be done so that the AIA can be used in full against other purchases. If the asset isn't sold within four years the total written down value is then transferred to the general pool.

Beth

That sounds about right to me. After 4 years, if it still hasn't been sold it's transferred to the main pool and the balancing charge/allowance that would have been received on disposal is lost in effect.