CA43350 - FCA: Initial allowances

CAA01/S393 - S393I

The rate of initial allowance is 100%. It is made for the chargeable period in which the qualifying expenditure is incurred.

A person entitled to initial allowance may claim less than the full 100%. If so WDA may be claimed in later chargeable periods.

An initial allowance may be claimed before the flat is let. It is withdrawn if the flat is not a qualifying flat CA43250 when it is first suitable for letting as a dwelling. It is also withdrawn if the person sells the relevant interest in the flat before it is first suitable for letting.

If an initial allowance is withdrawn assessments can be made or adjusted to withdraw any initial allowances that have already been given.

Example As in the example at CA43100 Rick runs a café-bar. It is in the ground floor of a 3 storey building Rick has a 75 year lease of the building. Rick converts the second and third floors of the building into qualifying flats. The work is done during the year ended 31 December 2006. Rick claims an initial flat conversion allowance (FCA) for 2005/06. He sells his lease of the building in January 2007. The FCA claimed for 2005/06 is withdrawn.