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Separate pooling used to come about under the 1990 Act if the statute deemed a separate trade to be carried on eg each lease otherwise than in the course of the trade of leasing.²²⁸ As we have seen, CAA 2001 rejects the paradigm case of trading in favour of the abstract phrase qualifying activity and so this particular example is redesignated as the qualifying activity of special leasing of Plant and Machinery.²²⁹

Certain short-life assets may be pooled separately if the taxpayer so elects.²³⁰

Where a first year allowance is taken, T may not also claim a writing down allowance for that first year.²³¹ When the 40% first year allowance was taken, the allowance in the second year is 25% of the 60% of the expenditure remaining.

No writing down allowance may be claimed for the period during which permanent discontinuance takes place; only a balancing allowance (or charge) is made.²³² A balancing adjustment may be made where a non-resident trades through a branch or agency in the UK and the proportion of the total trade represented by the UK branch or agency changes—downwards (ie is reduced).²³³

Where more items come into the pool, the writing down allowance is 25% of the excess of sums spent over sums so far allowed whether under a first year allowance or a writing down allowance plus disposal value.

24A.2.6.2    Examples

1. If an asset cost £1,000, and it was the only asset in the pool, the 25% writing down allowance for that year would be £250 (25% of £1,000) but 25% of £750, ie £187.50 in the second year.
2. Suppose that an asset was bought in the first year for £1,000 so that a £250 allowance was claimed in the first year and that a second asset was bought in the second year for £9,250. The pool of qualifying expenditure for the second year is £750 left unrelieved from the first year plus £9,250 for the new asset, making a total of £10,000 and so a maximum writing down allowance of £2,500.
3. Continuing on from (2) suppose that the first asset was sold in the third year for £1,000. Assuming that all allowances have been claimed the qualifying expenditure at the start of the year would be £7,500. This must now be reduced by the £1,000 disposal so that in the third year the allowance will be 25% of £6,000 or £1,625.

Disposal value is relevant when a disposal event occurs:²³⁵ in the account which follows T is the person who has incurred the qualifying expenditure.²³⁶ Disposal events arise when:

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