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HMRC internal manual

Capital Allowances Manual

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HM Revenue & Customs
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Assured Tenancy Allowances: Meaning of qualifying dwelling house

CAA01/S490 (4) - (5) and CAA01/S504 - S506

Not all dwelling houses which are let on a tenancy that is an assured tenancy are qualifying dwelling houses. A dwelling house let on a tenancy that is an assured tenancy can only be a qualifying dwelling house if the landlord is a company and is for the time being entitled to the relevant interest in it or is the person who incurred the capital expenditure on constructing it. The landlord does not need to be a company if the expenditure was incurred before 5 May 1983 or under a pre-15 May 1983 contract and the landlord acquired the relevant interest before that date.

Once a dwelling house has been a qualifying dwelling house it is treated as a qualifying dwelling house at any time when both of the following conditions are satisfied.

  • It is for the time being subject to a regulated tenancy or a housing association tenancy as defined in the Rent Act 1977. Broadly, this means that the tenancy is a tenancy that is subject to ordinary Rent Act Control.
  • The landlord under that tenancy was an approved body.

 

These are the conditions that stop a house being treated as a qualifying dwelling house even if it is let on a tenancy that is an assured tenancy, a regulated tenancy or a housing association tenancy.

  1. The landlord is a housing association which is approved for the purposes of ICTA88/S488
  2. The landlord is a self-build society for the purposes of ICTA88/S489 (see CTM40470).
  3. The landlord and tenant are connected persons.
  4. The tenant is a director of a company that is, or is connected with, the landlord.
  5. The landlord is a close company and the tenant is, for the purposes of Part XI of ICTA88, a participator in that company, or an associate of such a participator.
  6. The tenancy is entered into as part of a mutual arrangement for avoidance. A mutual arrangement for avoidance is an arrangement between the landlords or owners of different dwelling houses. Under it one landlord takes a person as a tenant in circumstances where, if that person were a tenant of the other, that dwelling house would not qualify by virtue of (c), (d), or (e) above. If any of the above conditions are satisfied the dwelling house is not a qualifying dwelling house. This means that no assured tenancy allowance is due.

 

A dwelling house may cease to be a qualifying dwelling house for various reasons. If the reason is something other than the sale or transfer of the relevant interest in it, treat the relevant interest as having been sold at market value at the time the dwelling house ceases to be a qualifying dwelling house. This means that there may be a balancing adjustment.

A dwelling house that falls temporarily out of use is not treated as ceasing altogether to be used. If a dwelling house is a qualifying dwelling house immediately before any period of temporary disuse, you should treat it as a qualifying dwelling house during the period of temporary disuse.