Short-life asset election (UK capital allowances)
A valid short-life asset election places eligible plant or machinery expenditure in a single-asset pool rather than the general pool. If the asset is disposed of within the applicable eight-year cut-off, a balancing allowance or charge can arise by comparing the pool balance with the disposal value. If retained beyond the cut-off, the remaining balance is transferred to the appropriate main pool, subject to the rules.
Worked example
A qualifying elected asset has a £3,000 pool balance before disposal within the relevant period and a £2,000 disposal value. Assuming no other adjustment, a £1,000 balancing allowance arises.
Common mistake
Assuming every asset automatically qualifies or that electing guarantees a balancing allowance even if disposal proceeds exceed the pool balance.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | TX (UK) | Direct | June 2026–June 2027 |