Should you elect Short Life Asset status? Compare NPV of tax relief — SLA election vs main pool — and get a clear recommendation. Up to 8 years to claim balancing allowance.
SLA vs Main Pool Comparison
Short Life Asset Election Explained
A Short Life Asset (SLA) election ring-fences a specific asset in its own pool. When the asset is sold or scrapped within 8 years, a balancing allowance gives full tax relief on any remaining pool value in the year of disposal — accelerating relief compared to the main pool where the balance continues getting only 18% WDA per year indefinitely.
When the SLA Election Pays Off
The election is most valuable when the asset depreciates faster than 18% per year in real terms. For example, a computer worth £20,000 might be virtually worthless after 4 years, but the main pool would still have an 18% WDA balance worth about 37% of cost (£7,400) at that point. With SLA, the balancing allowance of £7,400 is claimed in full at disposal — versus continuing at 18% WDA on that balance forever.
Timing vs Total Relief
The total amount of relief is identical in both scenarios (cost minus disposal proceeds). The only difference is timing. The NPV comparison quantifies the cash flow benefit of earlier relief. A higher discount rate means earlier relief is worth more — making the SLA election more attractive.
Frequently Asked Questions
A Short Life Asset (SLA) election allows a business to ring-fence specific plant or machinery in its own separate pool rather than merging it with the main pool. When sold within 8 years, a balancing allowance accelerates tax relief compared to the main pool.
An SLA election is beneficial when the asset will be sold or scrapped within 8 years for significantly less than the 18% WDA pool balance at that time. The balancing allowance accelerates the remaining relief into the disposal year rather than spreading it indefinitely via WDA.
Most plant and machinery that would go in the main pool can be a SLA — computers, machinery, equipment, commercial vehicles. Cars and special rate pool assets (integral features, long-life assets) cannot be elected as SLA.
If the asset is still held after 8 years, the SLA pool balance merges back into the main pool. No balancing allowance is available. The outcome is effectively the same as never making the election — 18% WDA continues on the merged balance.
No. Once a SLA election is made, it is irrevocable. The asset must be tracked in its own separate pool until disposal or the 8-year window expires.
Yes — if the asset is disposed of within 8 years, total relief equals cost minus disposal proceeds under both scenarios. The SLA only changes timing (faster relief), not total amount. The NPV comparison shows the cash-flow advantage of earlier relief.
If AIA has been claimed on the full cost, the SLA pool is zero — no further relief is needed. SLA elections only matter for assets where cost was NOT fully relieved by AIA, i.e. where a WDA balance remains. The election then determines whether that balance gets a balancing allowance at disposal.
Use your business's cost of capital or hurdle rate. Common rates: 5% (conservative), 8–10% (typical small business). A higher rate increases the NPV benefit of earlier (SLA) relief. The default 5% is reasonable for most purposes.
Main pool is better when: the asset will be held more than 8 years, disposal value is close to or above the WDA balance, AIA covers the full cost already, or the administrative cost of a separate pool is not worth the small NPV benefit.
Keep: original purchase invoice, the written SLA election (submitted with or referenced in the tax return), annual pool calculations showing WDA claimed each year in the separate SLA pool, and disposal records. HMRC may request evidence that the asset was properly ring-fenced from day one.
On the CT600 (corporation tax), report the SLA pool in the capital allowances section, showing opening balance, WDA claimed, disposal proceeds, and balancing allowance/charge. On self-assessment, use the capital allowances pages. Attach or reference the SLA pool schedule to the return.
Less common since the AIA limit was raised to £1 million, as most expenditure qualifies for full AIA. SLA elections are most relevant for large capex programmes or specific high-value equipment with a defined short ownership period where AIA limit has been exhausted.