CA45800 - Business Premises Renovation Allowance: Balancing adjustments and balancing events

Note: The BPRA guidance has not been updated to reflect the amendments made by s.66 FA 2014 which came into effect on 6 April 2014 for income tax purposes and 1 April 2014 for corporation tax purposes.

CAA01/ S360M and s360N

There is a balancing adjustment if there is a balancing event within 7 years of the first use of the building. A balancing adjustment is a balancing allowance or balancing charge. It is made to or on the person who incurred the qualifying expenditure 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.

Example

Cass buys a warehouse situated in a disadvantaged area that has been unused for 3 years and converts it into a hotel. She brings it into use immediately and claims 100% initial allowance. If she sells the hotel 8 years later the sale is a balancing event but there is no balancing adjustment because the sale is more than 7 years after the first use of the building.