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HMRC internal manual

Capital Allowances Manual

HM Revenue & Customs
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Assured Tenancy Allowances: Balancing adjustments

CAA01/S513 - S515

A balancing adjustment is a balancing allowance or a balancing charge. There is a balancing adjustment if there is a balancing event. There is no balancing adjustment if a balancing event occurs more than 25 years after the dwelling house was first used.

A balancing event is any one of the following:

  • the sale of the relevant interest,
  • the transfer of the relevant interest,
  • the ending of a leasehold interest unless the person holding the leasehold interest acquires the interest which is reversionary on it,
  • the dwelling house ceases to be a qualifying dwelling house,
  • the dwelling house is demolished or destroyed,
  • the dwelling house ceases altogether to be used.


Do not treat a dwelling house as ceasing altogether to be used if it falls temporarily out of use. You should not accept that a dwelling house has ceased altogether to be used unless it is not fit for use for any purpose.

These are the proceeds from balancing events.

Sale of the relevant interest Net sale proceeds
Transfer of the relevant interest Market value
Dwelling house ceases to be a qualifying dwelling house Market value
Demolition or destruction Net amount received for the remains plus any insurance money received and any other capital compensation received
Dwelling house becomes unfit for use Any capital compensation received