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HMRC internal manual

Capital Allowances Manual

From
HM Revenue & Customs
Updated
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IBA: Initial allowance: expenditure incurred in the year ended 31 October 1993

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.

Expenditure on constructing an industrial building or buying an unused one incurred in the year ended 31 October 1993 qualifies for initial allowance at a rate of 20% provided that the building was in use by 31 December 1994. An initial allowance may have been made before the building was brought into use. If it was still unused on 31 December 1994 the initial allowance was withdrawn.

Where a building was bought unused from someone other than a property developer the purchase price qualified for initial allowance to the extent that the construction expenditure was incurred in the year ended 31 October 1993.

Where a building was bought unused from a developer in the year ended 31 October 1993 the whole purchase price qualified for initial allowance even if the building was constructed before 1 November 1992.