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HMRC internal manual

Capital Allowances Manual

Business Premises Renovation Allowance: Initial allowance

CAA01/Section 360G and 360H

The initial allowance is 100% of the qualifying expenditure.

An initial allowance is made for the chargeable period in which the qualifying expenditureis incurred.

A person who claims initial allowance may claim a reduced amount. If they do the balanceof the expenditure after deducting the initial allowance qualifies for WDAs CA45600.

The initial allowance is withdrawn if

  • the building is not qualifying business premises when it is first used by the person who claimed the initial allowance or available for letting, or
  • the person sells the relevant interest before they bring the building into use or make it available for letting.
  • If you need to withdraw the initial allowance you may make any assessments or adjustments needed..

Example Dylan incurs qualifying expenditure of £950,000 converting awarehouse that has been disused for 3 years into a restaurant. He claims initialallowance. Once the conversion work is over he changes his mind about running a restaurantand decides that he does not want to let it. So he sells the restaurant to Cass for £1.2million. The initial allowance that Dylan has claimed is withdrawn.