Finance Act 2021

PART 2 Structures and buildings allowances

6 Part 2A of CAA 2001 (structures and buildings allowances) is amended as follows.

7 (1) Section 270AA (structures and buildings allowances) is amended as follows.

(2) In subsection (2)(b)(ii), for “the period of 33 1/3 years” substitute “the period of the length specified in subsection (2A),”.

(3) After that subsection insert—

“(2A) The length of the period referred to in subsection (2)(b)(ii) is—

(a) in the case of freeport qualifying expenditure, 10 years, and

(b) in the case of other qualifying expenditure, 33 1/3 years.”

(4) In subsection (5), for “3% of the qualifying expenditure” substitute “—

(a) in the case of freeport qualifying expenditure, 10% of the expenditure, and

(b) in the case of other qualifying expenditure, 3% of the expenditure.”

(5) In subsection (6), after “section—” insert—

• ““freeport qualifying expenditure” has the meaning given by section 270BNA;”.

8 In section 270BJ (expenditure on renovation, conversion or incidental repairs), after subsection (2) insert—

“(2A) For the purposes of subsection (1), in relation to a building or structure that has been brought into use at a time when the area in which the building or structure is situated was not a freeport tax site, section 270BNA(2) and (7) have effect as if the renovation or conversion of, or repairs to, part of the building or structure were the construction of that part for the first time.”

9 In section 270BK(3) (preparation of sites), for “and 270AB” substitute “, 270AB and 270BNA(2) and (7)”.

10 After section 270BN insert—

“CHAPTER 2A Freeport qualifying expenditure

270BNA Meaning of “freeport qualifying expenditure”

(1) In this Part, qualifying expenditure incurred on the construction or acquisition of a building or structure is “freeport qualifying expenditure” if conditions A to E are met.

(2) Condition A is that construction of the building or structure begins at a time when the area in which the building or structure is situated is a freeport tax site.

(3) Condition B is that the building or structure is first brought into qualifying use by the person entitled to the allowance under this Part—

(a) at a time when the area in which the building or structure is situated is a freeport tax site, and

(b) on or before 30 September 2026.

(4) Condition C is that the qualifying expenditure is incurred—

(a) at a time when the area in which the building or structure is situated is a freeport tax site, and

(b) on or before 30 September 2026.

(5) Condition D is that the person who incurs the qualifying expenditure is within the charge to income tax or corporation tax when it is incurred.

(6) Condition E is that an allowance statement—

(a) made for the purposes of section 270IA by the person who incurred the qualifying expenditure, and

(b) relied on for the purposes of the first valid claim for an allowance under this Part in respect of that expenditure,

states that the person wants the expenditure to be freeport qualifying expenditure.

(7) For the purposes of subsection (2), the construction of a building or structure is treated as beginning when the first contract for works to be carried out in the course of the construction of that particular building or structure (whether or not the contract also relates to the construction of other buildings or structures) is entered into.

(8) This section is subject to regulations under section 270BNC.

270BNB Apportionment

(1) Subsection (2) applies if, on the later of—

(a) the day on which the building or structure is first brought into non-residential use, and

(b) the day on which the qualifying expenditure is incurred,

a building or structure is situated only partly in an area that is a freeport tax site.

(2) Only so much of the qualifying expenditure as, on a just and reasonable apportionment, is attributable to the part situated in the freeport tax site is to be treated as freeport qualifying expenditure.

(3) Subsection (4) applies if a building or structure is first brought into qualifying use by the person entitled to the allowance under this Part partly on or before 30 September 2026 and partly after that date.

(4) Only so much of the qualifying expenditure as, on a just and reasonable apportionment, is attributable to the part first brought into qualifying use by that person on or before that date is to be treated as freeport qualifying expenditure.

270BNC Power to amend meaning of “freeport qualifying expenditure”

(1) The Treasury may by regulations change the conditions that must be met in order for qualifying expenditure to be “freeport qualifying expenditure” for the purposes of this Part (whether by adding, removing or altering conditions).

(2) Regulations under this section—

(a) may not remove the requirement for the building or structure to be situated in an area that is a freeport tax site, but

(b) may alter the time when that requirement must be satisfied.

(3) Regulations under this section may, among other things—

(a) make provision by reference to the expenditure, the building or structure, the person who incurred the expenditure or a person who is or has been connected with that person;

(b) impose conditions relating to accounts or other records;

(c) impose other conditions requiring a person to take steps specified in the regulations;

(d) make different provision for different purposes;

(e) include incidental, supplementary, consequential, transitional or transitory provision.

(4) Regulations under this section—

(a) may amend, repeal or otherwise modify section 270BNA and other provisions of this Part, and

(b) where made under subsection (3)(e), may amend, repeal or otherwise modify other provisions of this Act or provisions of another Act.”

11 (1) Section 270EB (multiple uses) is amended as follows.

(2) In subsection (2), for “3%” substitute “the relevant percentage”.

(3) After subsection (3) insert—

“(3A) For the purposes of subsection (2), “the relevant percentage” means the percentage specified in section 270AA(5).”

12 In section 270IA(4) (evidence of qualifying expenditure etc), after subsection (4) insert—

“(5) Where the qualifying expenditure described in subsection (4)(b) consists of or includes freeport qualifying expenditure (as defined in section 270BNA), a statement is not an allowance statement unless it states the amount of the freeport qualifying expenditure.”