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HMRC internal manual

Capital Allowances Manual

IBA: balancing adjustments: proceeds from balancing events

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/S316 and CAA01/S573 

These are the proceeds from balancing events.

Event Proceeds
Sale of relevant interest Net proceeds of sale
Transfer, not by sale, of relevant interest Market value unless there is an election to treat the sale as being for an alternative amount CA13200 
Demolition or destruction of building Net amount received for the remains of the building plus any insurance moneys received for the demolition or destruction and any other capital compensation received
Building ceasing altogether to be used Any capital compensation received for the event
Coming to an end of a foreign concession Any compensation payable

When a building is sold together with its site, or anything else that does not represent the cost of that building, you should apportion the sale proceeds to exclude the part that relates to the land or assets other than the building. You are reminded that the advice of the District Valuer must be obtained in all apportionment cases and you must not agree the apportionment without the approval of the District Valuer. Further guidance on the information to be provided to the District Valuer is given at CA12300.