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HMRC internal manual

Capital Allowances Manual

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HM Revenue & Customs
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IBA: enterprise zones: writing down allowances

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. This phasing out does not apply to EZ WDAs. They continue in full until the cut-off date. There are no IBA writing down allowances for the financial year beginning on 1 April 2011 and subsequent years.

CAA01/S310 (1)(a), FA08/S82

The annual rate of WDA is 25% for the person who constructed the building or bought it unused.

FA08 phases out IBAs. This phasing out does not apply to EZ WDAs. They continue in full until the cut-off date. The cut-off date is 1 April 2011 (CT) or 6 April 2011 (IT). They stop on that date.

You may have a chargeable period that crosses the cut-off date. If so the WDA for that chargeable period is

DCPB x WDA divided by

DCP

Where DCPB = number of days in the chargeable period before the cut-off date

DCP = number of days in the chargeable period

WDA = the WDA that would have been made for the chargeable period before the introduction of the FA08 legislation. Where a person buys a used building in an enterprise zone the WDA is based on the residue of qualifying expenditure after sale in the normal way CA34600.