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HMRC internal manual

Capital Allowances Manual

From
HM Revenue & Customs
Updated
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IBA: Qualifying expenditure: Separate treatment of each block of expenditure

Expenditure on constructing an industrial building may be incurred at different times or by different people. For example, the lessee of a factory may build an extension to it.The lessee will not have incurred the expenditure on constructing the factory - that will have been incurred by the factory owner. The owner of the factory will hold the relevant interest in the original factory building and the lessee will hold the relevant interest in the extension.

You should apply the IBA legislation to each block of expenditure separately. In the example in the paragraph above the IBA for the factory owner and the lessee are calculated separately.

You should also apply the IBA legislation to each block of expenditure separately where the same person incurs them at different times. If the factory owner had incurred the expenditure on the extension to the factory, IBA on the original factory and the extension would be calculated separately.