There is a balancing adjustment if there is a balancing event
within 7 years of the time when the flat was first suitable for
letting. A balancing adjustment is either a balancing allowance or
balancing charge. If there is more than one balancing event there
is only a balancing adjustment on the first one.
These are the balancing events and the proceeds to be brought
into account.
| Balancing Event | Proceeds from Event |
| Transfer of relevant interest | Net proceeds of sale if
the relevant interest is sold
Market value if the transfer is other than by way of sale |
| Grant of a long lease out the relevant interest for a capital sum | The capital sum paid for the grant or, if less than the commercial premium, the commercial premium |
| The coming to an end of a lease where a person entitled to the lease and a person entitled to any superior interest are connected persons | The market value of the relevant interest at the time of the event |
| Death of the person who incurred the qualifying expenditure | The residue of qualifying expenditure immediately before death |
| Demolition or destruction of the flat | The net amount received plus any insurance or compensation receipts |
| Flat ceases to be a qualifying flat, for example because it is let to a person connected with the person who incurred the qualifying expenditure | The market value of the relevant interest at the time of the event |
There is a balancing allowance if:
The balancing allowance is the difference between the proceeds
(if any) and the residue of unrelieved qualifying expenditure.
There is a
balancing charge where the proceeds are greater
than the residue of qualifying expenditure immediately before the
event. The amount of the balancing charge is:
A balancing charge made on a person cannot be more than the allowances (initial and writing down) made to the person in respect of the flat.
