CA23230 - PMA: WDA & balancing adjustments: Available qualifying expenditure

This is how you calculate the available qualifying expenditure in a pool for a chargeable period. Start with the qualifying expenditure in the pool at the end of the previous chargeable period. This is sometimes called the pool brought forward. Add qualifying expenditure incurred in the chargeable period to the pool brought forward and the balance of expenditure qualifying for FYA in the previous chargeable period after deducting FYA claimed to the pool brought forward. Then deduct disposal values for the chargeable period to give the pool for the chargeable period. Apply the appropriate percentage to this to get the WDA for the chargeable period. You then deduct that WDA from the pool for the pool for the chargeable period to get the pool to carry forward.

Example Michael and Peter have a pool brought forward of £12,000 at 1 January 2004. In the year ended 31 December 2004 they spend £8,000 on new computer equipment and sell a word processor for £4,000. The pool for the year ended 31 December 2004 is £12,000 + £8,000 -  £4,000 = £16,000. The WDA available is £4,000 = 25% of £16,000. If Michael and Peter claim WDA of £4,000 the pool carried forward at 31 December 2004 is £12,000. This is also the pool brought forward at 1 January 2005.