CA23710 - PMA: Long life assets: Outline

Long-life assets qualify for a lower rate of writing-down allowances than other plant and machinery. There is a separate pool - the long-life assets pool - that contains all the expenditure on long-life assets CA23760. WDAs are given at an annual rate of 6% on the reducing balance basis on the expenditure in that pool. There is not a balancing adjustment when the last long-life asset is disposed of. Balancing adjustments only arise if the qualifying activity is permanently discontinued. A SLA election CA23640 may not be made for long-life assets.

The long-life assets legislation was introduced in FA97. It does not apply to expenditure incurred before 26 November 1996 or to expenditure incurred before 1 January 2001 under a contract entered into before 26 November 1996. That expenditure qualifies for WDAs at the normal 25% rate. Some assets are excluded from long-life assets treatment CA23730. There is a monetary limit. If the total expenditure on long-life assets in a chargeable period is less than the limit the long-life assets legislation does not apply CA23740. Once an asset has been treated as a long- life asset it continues to be treated as one even if its ownership changes except where the use by the new owner comes within the exclusions CA23750.