First year allowance and short life assets

In this lesson

1. 0:00 First year allowance and zero emissions cars
2. 0:36 Short life assets explained
3. 1:16 Election strategy and balancing allowances
4. 2:14 Short life asset disposal rules
5. 3:14 Worked example: laptop short life election

About this lesson

You'll discover which assets qualify for each treatment, how to identify them in exam questions, and crucially, when to make elections that maximise your client's tax relief. First year allowance applies exclusively to electric cars or vehicles with zero CO2 emissions. Unlike the Annual Investment Allowance, there's no expenditure limit for FIA, and the asset must be brand new (unused). In your exam, you're looking for that one car that qualifies for 100% relief in the year of purchase—cars normally receive no allowances and sit in the main or special rate pool. Short life assets are those you expect to keep for a short period and sell at a loss. You can elect to put them in their own column rather than the main pool, which allows you to claim a balancing allowance when you dispose of them. The key benefit is recovering more relief through that balancing allowance rather than having the asset absorbed into the pool where it simply receives ongoing writing down allowance. If you expect to sell for a profit, don't make the election—keep it in the main pool instead. The election must be made by the first anniversary of 31 January following the tax year in which you acquired the asset, and if you haven't disposed of it within eight years, the tax written down value transfers to the main pool automatically.

Duration: 5m