CA37050 - IBA: Enterprise zones: Background and definition

Wider availability and a special rate of IBA for buildings constructed in an enterprise zone were introduced by FA80. The legislation was intended to stimulate new building in certain areas of physical and economic decay such as London Docklands. The areas are designated by the Secretary of State for the Environment (or, where appropriate, by the Secretaries of State for Scotland and Wales or by the Department of Environment for Northern Ireland) as enterprise zones.

Once an area has been designated an enterprise zone the designation lasts for 10 years.

Construction expenditure on a site in an enterprise zone incurred:

• within 10 years of the designation of the zone, or
• under a contract entered into within 10 years of the designation of the zone and within 20 years of the designation of the zone,

qualifies for a higher rate of IBA.

It is called qualifying enterprise zone expenditure.

Under the enterprise zone legislation the range of buildings qualifying for IBA is extended. There is a higher rate of initial allowance and a higher rate of WDA where those allowances are claimed by the person who incurred, or is deemed to have incurred, expenditure on constructing the building.

These allowances are sometimes referred to as enterprise zone allowances but you should remember that they are normal IBA at a higher rate.

The normal IBA rules apply to buildings in enterprise zones with one or two exceptions. The exceptions are described at CA37500.

There is a list of enterprise zones at CA37600.