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HMRC internal manual

Capital Allowances Manual

Business Premises Renovation Allowance: Balancing adjustments and balancing events

CAA01/ S360M and s360N

There is a balancing adjustment if there is a balancing event within 7 years of thefirst use of the building. A balancing adjustment is a balancingallowance or balancing charge. It is made to or on the person who incurred the qualifyingexpenditure and is made for the chargeable period in which the balancing event occurs.

If there is more than one balancing event within 7 years of the first use of the building,a balancing adjustment is only made on the first one.

A balancing event is

  • the sale of the building,
  • the grant of a long lease out of the relevant interest for a capital sum,
  • the ending of a lease that is the relevant interest without the lessee acquiring the interest reversionary on it,
  • the death of the person who incurred the qualifying expenditure,
  • the demolition or destruction of the qualifying building or
  • the qualifying building ceasing to be qualifying business premises.

If a balancing event occurs more than 7 years after the first use of the building thereis not a balancing adjustment.


Cass buys a warehouse situated in a disadvantaged area that has been unused for 3 yearsand converts it into a hotel. She brings it into use immediately and claims 100% initialallowance. If she sells the hotel 8 years later the sale is a balancing event but there isno balancing adjustment because the sale is more than 7 years after the first use of thebuilding.