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HMRC internal manual

Capital Allowances Manual

Assured Tenancy Allowances: Writing down allowances

CAA01/S507 - S510

These are the conditions to be satisfied for a person to claim writing down allowance for a chargeable period.

  • The person is or has been an approved body.
  • The person is entitled to the relevant interest CA85500 in the building at the end of the chargeable period.
  • The building includes at least one qualifying dwelling house CA85400 at the end of the chargeable period.

 

If there has been no sale or transfer of the relevant interest since the building was brought into use the annual rate of writing down allowance is 4% of the qualifying expenditure attributable to the dwelling house. If the chargeable period is more or less than a year the 4% is proportionately increased or reduced. For example, if the chargeable period is 15 months long the rate of WDA for that chargeable period is 5% (= 4% x 15/12).

This is how you calculate WDAs after the relevant interest has been sold or transferred. Work out the length of the period from the date of the sale or transfer to the end of the period of 25 years beginning with the date on which the dwelling house was first used. The residue of qualifying expenditure after the sale or transfer is multiplied by the length of the chargeable period divided by that length of time. The writing down allowance for a chargeable period is limited to the residue of qualifying expenditure attributable to the dwelling house. The residue of qualifying expenditure attributable to the dwelling house is the qualifying expenditure attributable to the dwelling house still to be written off.