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HMRC internal manual

Capital Allowances Manual

IBA: enterprise zones: change of use

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.

After a building has qualified for enterprise zone allowances its use may change.

Ignore the change of use if the building is an industrial building or a commercial building or a qualifying hotel after the change of use.

Once expenditure has qualified for enterprise zone allowances it stays in the IBA scheme even if it is a commercial building that would not normally qualify for IBA. For example, a person who buys a used commercial building in an enterprise zone after the expiry of the 10-year designation period may claim WDA in the normal way (subject to the normal 25 year rule for used buildings).