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HMRC internal manual

Capital Allowances Manual

From
HM Revenue & Customs
Updated
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IBA: Qualifying expenditure: Expenditure on the construction of a building

You should give IBA on capital expenditure incurred on the construction of a building or the capital cost of buying an unused building.

Expenditure incurred on the construction of a building includes:

  • capital expenditure on repairs, that is expenditure on repairs for which a Case 1 deduction could not be made CA31450;
  • the costs of demolishing an existing building in order to erect a new building provided that those costs are not taken into account in calculating a balancing adjustment on the old building;
  • professional fees relating to the design and construction of a building provided that the building is actually constructed;

 

and so you should give IBA on those costs.

Expenditure on the construction of a building does not include:

  • the cost of obtaining planning permission. If, however, a builder’s quotation includes the cost of obtaining planning permission do not try to disallow that part of the quotation;
  • capitalised interest;
  • the cost of a public enquiry;
  • the cost of land drainage and reclamation;
  • landscaping;
  • legal expenses;

 

and so these costs do not qualify for IBA.