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HMRC internal manual

Capital Allowances Manual

IBA: Allowances: initial allowance

Budget 2007 announced a business tax reform package including the gradual withdrawal of IBAs and ABAs over four years. Legislation was introduced in FA08 to give effect to those changes. The phased withdrawal of IBA writing down allowances had effect for chargeable periods ending on or after 1 April 2008 for businesses within the charge to CT and 6 April 2008 for businesses within the charge to IT. There are no IBA writing down allowances for the financial year beginning on 1 April 2011 and subsequent years.

CAA01/S306 & CAA01/SCH3/PARA75 - 77

The rate of initial allowance is 100% for buildings that qualify for the special rates of IBA for buildings in enterprise zones CA37000.

Normally, there is no initial allowance available on industrial buildings outside enterprise zones.

Initial allowance was introduced temporarily at a rate of 20% for construction expenditure incurred in the year ended 31 October 1993 on industrial buildings and qualifying hotels. That initial allowance was withdrawn if the building was not brought into use by 31 December 1994