Capital Allowances Act 2001 section 58

Initial allocation of qualifying expenditure to pools

Section 58 sets out the rules governing when and how qualifying expenditure on plant and machinery is first allocated to a capital allowances pool.

• Qualifying expenditure can only be allocated to a pool for the period in which it is incurred or later, and only if the person owns the plant or machinery at some point during that period.
• Expenditure already taken into account in an earlier period's available qualifying expenditure cannot be allocated again.
• Where an annual investment allowance (AIA) is claimed, the relevant expenditure must be allocated to the appropriate pool in that period, but the pool's available qualifying expenditure is reduced by the AIA amount.
• Where a first-year allowance is claimed, only the balance of expenditure remaining after deducting the allowance enters the pool — and if the asset is disposed of before that balance has been pooled, the balance (even if nil after a 100% allowance) must be allocated in the period of disposal.