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HMRC internal manual

Capital Allowances Manual

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HM Revenue & Customs
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IBA: enterprise zones: realisation of capital value: definitions

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.

Capital value is any capital sum. It includes what would have been a capital sum if it had been a money payment. It does not include any part of a premium that is taxable under ICTA88/S34 or is brought into account as a receipt in calculating the profits of a UK property business under ITTOIA/S277 - S281.

An interest in land is:

  • a leasehold estate in the land
  • an easement or servitude
  • a licence to occupy land.

 

Where the interest in land is a leasehold estate in the land it can be a head-lease, sub-lease or under-lease.

Commercial amount is the amount that would have been given in an arm’s length transaction.

Commercial premium is the premium that would have been given in an arm’s length transaction.

Commercial rent is the rent that could reasonably have been expected to be paid for the subordinate interest, taking account of any premium payable for the grant of that interest, if the transaction had been at arms length.

Granting an interest in land includes agreeing to grant any such interest.

In Scotland any references in the legislation or this guidance to assignment should be read as references to assignation.