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HMRC internal manual

Capital Allowances Manual

Business Premises Renovation Allowance: Writing down allowance and residue of qualifying expenditure

CAA01/Section 360I, section 360J and section 360K

If the 100% initial allowance is not claimed, or is not claimed in full, the personholding the relevant interest in the qualifying building in relation to the qualifyingexpenditure may claim writing down allowances (WDAs). WDAs are given tothe person holding the relevant interest at an annual rate of 25% on the straight linebasis until all the qualifying expenditure has been allowed.

WDAs are not available if the person holding the relevant interest has granted a longlease out of the relevant interest for a premium.

There is a limit on WDA. The WDA for a chargeable period cannot be more than the residueof qualifying expenditure. The residue of qualifying expenditure is thequalifying expenditure that has not been written off.


Tracey incurs qualifying expenditure of £950,000 converting a warehouse that has beendisused for 3 years into a restaurant. She claims initial allowance of £450,000. Sheopens the restaurant and claims WDAs. She gets WDA of £237,500 for 2 years. After 2 yearsWDA the residue of qualifying expenditure is £25,000 and so Tracey gets WDA of £25,000in the third year.