-
-
-
-
Home > > Limited companies > Industrial buildings allowance
Industrial buildings allowance
Capital allowances for the construction costs of industrial buildings or structures fall under several different headings, but collectively they are known as industrial buildings allowances (IBAs). They are normally available to the building owner, but there are certain circumstances where a tenant may claim for additional capital expenditure on an existing qualifying building.
Buildings in use for a qualifying trade
Qualifying trades include among others the manufacturing or processing of goods or materials, the storage of goods or materials which are to be used in the manufacture of other goods or materials, some agricultural contracting activities, catching fish or shell fish and mineral extraction. There is no statutory definition and so various processes have been tested in the courts, sometimes with surprising results. For instance breeding rodents for experimental purposes qualifies, but accelerating the growth of tropical fish in heated tanks does not! Landlords may therefore need to carry out considerable detailed research to establish whether it is possible that their tenants are carrying out qualifying trades.
IBAs for 2010/11 are given by reducing the tax written down value of the building by 4% of the original cost (excluding land costs) and then claiming a reduced allowance according to the following table:
Companies : Financial Year Partnerships and sole traders : Fiscal Year Claim % of writing down allowance Starting 1 April 2010 2010/11 25% Starting 1 April 2011 2011/12 0% If you buy a used building you may be entitled to claim IBA on the vendor's tax written down value after the sale, divided by the length of time between the date of sale and the end of the 25 year period.
Qualifying hotels and sports pavilions
The qualification is more clearly defined, but the relief works in the same way as for industrial buildings, outlined above.
Commercial buildings in enterprise zones
Where an area has been designated as an Enterprise Zone, allowances on the construction costs of commercial buildings are much more generous. An initial allowance of 100% is available on any buildings other than dwelling houses. Even if part of the building is used as a dwelling, the whole expenditure still qualifies so long as the expenditure on that part does not exceed 25% of the total building cost. A lower amount than the full 100% may be claimed, in which case the residual expenditure qualifies for a writing down allowance of 25% on cost (straight line method).
This is quite a complex area of legislation and you would be well advised to seek professional assistance.
Business premises renovations allowance (BPRA)
The BPRA provides a 100% initial allowance for capital expenditure on the renovation or conversion of business properties that have been vacant for more than one year in a designated development area.
Tax - the company and directors
- The tax system for companies
- Tax and the company car
- Company bonus or dividend?
- Entrepreneurs' relief
- Tax saving strategies
- Claiming expenses - it's all or nothing
- Benefits in kind and expenses payments
Company tax insights
- Corporation tax rates
- Penalties for late returns
- Main capital allowances
- Industrial buildings allowance
- Interest and tax payments
- Business deductions
The Companies Act 2006
- An introduction to the Companies Act 2006
- An overview of the key changes
- A more in-depth look at the Act
- Other sections of the Act
- Filing of accounts and late filing penalties
Limited company formation basics
- Should you form a limited company?
- Forming a limited company
- Buying a company 'off the shelf'
- The law and directors' responsibilities
- Statutory records
- The company secretary
A selection of our other business guides
Our Latest News
- Increase in risk of a second recession, says think-tank
The chances of the UK economy entering a second recession next year have risen, according to the National Institute for Economic and Social Research (NIESR).
- more
- UK skills training needs radical overhaul
The British economy could find itself facing a period of decline if the skill levels of the workforce do not show marked improvement, it has been claimed.
- more
- Compulsory retirement age to be retired
The government is proposing to scrap the default retirement age of 65 by October 2011.
- more
- Savers not being told about interest rate changes
Many banks and building societies are failing to keep savers properly informed about changes to the interest rates on their accounts, comsumer group Which? has claimed.
- more
- Self-employment declarations should be respected
With thousands of people predicted to start up their own micro-businesses as unemployment rises, a business group has called on the tax authorities to respect their employment status.
- more
- Government publishes a raft of tax consultations
The Treasury has issued nine consultation papers on various aspects of the personal and business tax system in what amounts to a far-reaching overhaul of the entire regime.
- more
- Prospect of rise in energy costs for business
Businesses have been warned that they could see a steep rise in energy costs over the coming years.
- more
- Banks under pressure to increase small business lending
Banks could face possible tax sanctions if they fail to boost lending to smaller businesses.
- more
Harrison Young,
First Floor,
1 Gatton Road,
London
SW17 0EX
TEL: 0208 767 0151
FAX: 020 8767 5359
Click to email us
Harrison Young is a trading style of Ashley Ross Limited, Registered in England no. 05717229 and whose registered office is at 1 Gatton Road, London SW17 0EX.and is registered as Auditors by The Association of Chartered Certified Accountants. Read our Disclaimer.