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HMRC internal manual

Property Income Manual

HM Revenue & Customs
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Capital allowances: industrial buildings allowance for lessors


There is full guidance about industrial buildings allowance in CA30000 onwards - refer to that if you require more detail. The PIM concentrates on the aspects of industrial buildings allowance which affect property income.

Who gets IBA?

Industrial buildings allowance is available to the person holding the ‘relevant interest’ in the building. The definition of relevant interest is discussed in CA33000 onwards, but it is generally the interest in the building which the person constructing it had when they incurred the construction expenditure. It is usually a freehold or leasehold interest. The holder of the relevant interest might be:

  • a taxpayer who carries on a trade in an industrial building himself, or
  • the lessor of an industrial building in which someone else carries on a trade.

Method of giving allowances

Allowances are deducted in computing the profit of the rental business, and balancing charges are added, just as for plant and machinery capital allowances, (see PIM3050).

Relevant interest

Relevant interest is defined in CAA01/S286 as meaning ‘in relation to any expenditure incurred on the construction of a building or structure, the interest in that building or structure to which the person who incurred the expenditure was entitled when he incurred it’. (The relevant interest may be sold, and therefore the holder of it may not be the person who originally incurred the expenditure.)