IBA: initial allowance: withdrawal of 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.
An initial allowance may be made before the building is brought into use on the grounds that the building is going to be an industrial building. Initial allowances are not generally available. You should also withdraw the initial allowance if the relevant interest in the building is transferred before the building is brought into use.
Initial allowances (but not WDA which depends on use) may be given on a building while it is being built. If a building is abandoned when it is partly built and it becomes clear that the building will never be completed you should withdraw any initial allowances that have been given. They have been given because qualifying expenditure has been incurred on the construction of a building that is to be an industrial building. Once it becomes clear that there never will be an industrial building that condition is no longer satisfied.