Part 3

Industrial buildings allowances
Chapter 6

Writing-down allowances

Entitlement to writing-down allowance
309
1
A person is entitled to a writing-down allowance for a chargeable period if—
a
qualifying expenditure has been incurred on a building,
b
at the end of that chargeable period, the person is entitled to the relevant interest in the building in relation to that expenditure, and
c
at the end of that chargeable period, the building is an industrial building.
2
A person claiming a writing-down allowance may require the allowance to be reduced to a specified amount.

Basic rule for calculating amount of allowance
310
1
The basic rule is that the writing-down allowance for a chargeable period is—
a
in the case of qualifying enterprise zone expenditure, 25% of the expenditure, and
b
in the case of other qualifying expenditure, 4% of the expenditure.
2
The allowance is proportionately increased or reduced if the chargeable period is more or less than a year.
3
This basic rule does not apply if section 311 applies.

Calculation of allowance after sale of relevant interest
311
1
If a relevant event occurs, the writing-down allowance for any chargeable period ending after the event is—
RQEx A/B
where—
RQE is the amount of the residue of qualifying expenditure immediately after the event,
A is the length of the chargeable period, and
B is the length of the period from the date of the event to the end of the period of 25 years beginning with the day on which the building was first used.
2
On any later relevant event, the writing-down allowance is further adjusted in accordance with this section.
3
“
Relevant event
” means—
a
a sale of the relevant interest in the building which is a balancing event to which section 314 applies, or
b
an event which is a relevant event for the purposes of this section under section 347 or 349 (additional
VAT
liabilities and rebates).

Allowance limited to residue of qualifying expenditure
312
1
The amount of the writing-down allowance for a chargeable period is limited to the residue of qualifying expenditure.
2
For this purpose the residue is ascertained immediately before writing off the writing-down allowance at the end of the chargeable period.

Meaning of “the residue of qualifying expenditure”
313
The residue of qualifying expenditure is the qualifying expenditure that has not yet been written off in accordance with Chapter 8.

Calculation of allowance after sale of relevant interest: anti-avoidance
313A
1
This section applies where—
a
there is a sale of the relevant interest in the building which is a balancing event to which section 314 applies,
b
the buyer and seller have different chargeable periods,
c
the control test (within the meaning of section 567) is met, and
d
the purpose, or one of the main purposes, of the sale is the obtaining of a tax advantage by the buyer under this Part.
2
The writing-down allowance to which the buyer is entitled for the chargeable period in which the sale takes place is—
DI/CP × WDA
where—DI is the number of days in the chargeable period for which the buyer is entitled to the relevant interest,CP is the number of days in the chargeable period, andWDA is the writing-down allowance to which the buyer would be entitled apart from this section.
Pt. 3 modified (24.2.2003) by Proceeds of Crime Act 2002 (c. 29), s. 458(1), Sch. 10 para. 18 (with Sch. 10 para. 21); S.I. 2003/120, art. 2, Sch. (with arts. 3 4) (as amended (20.2.2003) by S.I. 2003/333, art. 14)
S. 45H(2) modified (with effect in accordance with s. 167 of the amending Act) by Finance Act 2003 (c. 14) , Sch. 30 para. 7
Pt. 3 modified (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 4 para. 5 ; S.I. 2004/2575 , art. 2(1) , Sch. 1
S. 313 applied (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 4 para. 6 ; S.I. 2004/2575 , art. 2(1) , Sch. 1
Pt. 3 modified (E.W.S.) (8.6.2005) by Railways Act 2005 (c. 14), s. 60(2), Sch. 10 para. 4; S.I. 2005/1444, art. 2(1), Sch. 1
Pt. 3 modified (8.6.2005) by Railways Act 2005 (c. 14), s. 60(2), Sch. 10 para. 15; S.I. 2005/1444, art. 2(1), Sch. 1
Pt. 3 modified (24.7.2005) by Railways Act 2005 (c. 14), s. 60(2), Sch. 10 para. 24; S.I. 2005/1909, art. 2, Sch.
Pt. 3 restricted (19.7.2007) by Finance Act 2007 (c. 11), s. 36(1)-(3), (7)
Pt. 3 omitted (with effect in relation to chargeable periods beginning on or after 1.4.2011 for corporation tax purposes and 6.4.2011 for income tax purposes in accordance with ss. 84(1)(3)(4), 85, 86 of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 84(2) (with Sch. 27)
S. 313A inserted (with effect in accordance with s. 87(2)(3) of the amending Act) by Finance Act 2008 (c. 9), s. 87(1)
Pt. 3 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 21(1)
S. 311 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 28
Pt. 3 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 38(1)