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HMRC internal manual

Capital Allowances Manual

IBA: Qualifying trade: Excepted use

CAA01/S277 (1)

Not all buildings in use for a qualifying trade qualify for IBA. A building in use as, or as part of, or for purposes ancillary CA32313 to, any of the following does not qualify for IBA even if it is also in use for the purposes of a qualifying trade:

  • a dwelling house,
  • a retail shop, or premises similar to a retail shop where retail trade or business (including repair work) is carried on CA32311,
  • a showroom,
  • a hotel,
  • an office CA32312.


This rule does not apply to some buildings provided for workers employed on foreign plantations or in mineral extraction CA32330.

Normally, where there is mixed use of a building, that is where the building is used for different purposes and all parts of the building are used for those different purposes, you should give IBA provided that the use for the purposes of a qualifying trade is not negligible CA32315. This does not apply when one of the uses is excepted use. Any use of a building for the purposes of a retail shop etc. prevents IBA being given no matter how small the excepted use is.

This rule does not stop IBA being given where there are separate parts of a building, some of which are used for an excepted use and some of which are not. In that case you should look at each part individually, using the legislation that says building includes part of a building. If the use of one part is excepted use, that part does not qualify for IBA but its excepted use does not stop the other parts of the building qualifying for IBA if they are used for a qualifying trade. If the expenditure on constructing the part in excepted use is less than 25% (previously 10%) of the total construction expenditure and the rest of the building is used for a qualifying trade the whole building will qualify for IBA, CA32700.