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HMRC internal manual

Capital Allowances Manual

IBA: other rules about buildings: disregard legislation applies to a building not premises

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.

The legislation that lets you disregard a percentage of non-qualifying use applies to an individual building. It does not apply to a collection of buildings on the same site even if taken together they form composite premises for a business (Abbott Laboratories Ltd. v Carmody 44TC569). Abbott Laboratories developed a site for their trade of manufacturing pharmaceutical products. They claimed IBA on the administration block that was connected to the pharmaceutical block, 25 yards away, by a covered passageway on the grounds that the IBA legislation let them treat all the buildings on the site as a single building. The company lost because it was held that the administration block was not sufficiently integrated with the other blocks to justify treatment of the complex of buildings as a single building.

You should treat two buildings that are linked by an overhead bridge or a covered corridor as separate buildings if the link can be easily removed. The question of whether premises constitute a single building is a question of fact and so if there is a dispute you may find visiting the premises worthwhile. You may also find the following questions helpful:

  • are there common water supplies, power supply, heating system etc. If there are this is in favour of there being one unified structure
  • can a part be demolished without seriously damaging the other parts. If the answer is ‘no’ this is evidence in favour of there being one unified structure.


The question of what is a unified structure was considered in Lancashire Electric Power Company v Wilkinson 28TC427. In that case the power house of an electricity generating station was held to be a single industrial building.