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HMRC internal manual

Capital Allowances Manual

ABA: buildings bought unused

Agricultural buildings allowance was phased out by FA2008.

A person gets

  • 75% of the allowance for the financial year beginning 1 April 2008 / tax year 2008/09
  • 50% of the allowance for the financial year beginning 1 April 2009 / tax year 2009/10
  • 25% of the allowance for the financial year beginning 1 April 2010 / tax year 2010/11

There is no ABA for the financial year beginning 1 April 2011 / tax year 2011/12 onwards.

CAA01/S370

A person who builds an agricultural building may sell the related agricultural land before the building is brought into use. When that happens, the person who constructed the building cannot claim ABA but the person who buys the related agricultural land can. The buyer’s qualifying expenditure is the lower of the construction cost and the price paid.

Example Dave is a farmer and builds a cottage for £100,000. If he sells the related agricultural land to Robin before the cottage is brought into use and the part of the sale price relating to the cottage is:

  • £105,000, Robin can claim ABA on £100,000;
  • £99,000, Robin can claim ABA on £99,000.

If the person who constructed an agricultural building sells part of the related agricultural land before the building is brought into use apportion the construction expenditure on a just and reasonable basis between the part of the land sold and the part retained. Once you have done that look at each part of the expenditure separately.

Example Maggie owns a farm. She incurs capital expenditure on constructing a barn. Before she brings the barn into use she sells the part of the farmland on which the barn stands. Apportion all of the cost of constructing the barn to the land on which the barn stands because Maggie will have sold the barn along with the land that it stands on and will not be able to use it after the sale. If, however, Maggie incurs capital expenditure on a farm road which serves the whole farm and which had not been brought into use when part of the land was sold apportion the cost of the road. Treat the part of the expenditure on constructing the road apportioned to the land that was sold as sold along with it.