B3.603 Patent rights writing down allowances
The calculation of allowances for expenditure incurred after 31 March 1986 is similar to that for plant and machinery (see Division B3.3). Qualifying expenditure (see B3.602) is pooled for the purpose of determining entitlement to writing-down allowances and balancing allowances and liability to balancing charges1.
The provisions for expenditure incurred before 1 April 1986 are no longer relevant as expenditure was written off on a straight-line basis of over 17 years.
There is a separate pool:
(a) for each trade in respect of which the person has qualifying trade expenditure (see B3.602); and
(b) for all of the person's qualifying non-trade expenditure (see B3.602)2.
A person is entitled to a writing-down allowance for a chargeable period (except the final chargeable period) if AQE exceeds TDR for that period, where:
(i) AQE is the available qualifying expenditure in the pool for that period; and
(ii) TDR is the total disposal receipts to be brought into account in that pool for the period3.
The allowance is 25% of the excess4, but the claimant may require the allowance to be restricted to a specified amount5.
'Available qualifying expenditure' (AQE) in a pool for a chargeable period is made up as follows:
(a) qualifying expenditure allocated to the pool for that period in accordance with the allocation rules described below; plus
(b) any unrelieved qualifying expenditure carried forward in the pool from the previous chargeable period under the rules for such expenditure described below6.
Under the allocation rules referred to above:
(a) an amount