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HMRC internal manual

Capital Allowances Manual

IBA: initial allowance: transport grants

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. CAA01/S308

Expenditure that is taken into account for certain transport grants does not qualify for initial allowance. The grants are:

  • a grant under section 32, 34 or 56 (1) of the Transport Act 1968
  • a payment made under section 56 (2) of the Transport Act 1968
  • a grant under section 12 of the London Regional Transport Act 1984.

 

The grant or payment may be received after an initial allowance has been made. If so you should withdraw the initial allowance to the extent that the expenditure was taken into account for the grant. If the recipient of the grant repays it wholly or partly, the grant is treated to that extent as if it had never been made and so initial allowance becomes available. There is an extended time limit for both situations. Assessments and adjustments may be made up to the end of 3 years after the end of the chargeable period in which the grant was made or repaid.