CA45600 - Business Premises Renovation Allowance: Writing down allowance and residue of qualifying expenditure

CAA01/Section 360I, section 360J and section 360K

If the 100% initial allowance is not claimed, or is not claimed in full, the person holding the relevant interest in the qualifying building in relation to the qualifying expenditure may claim writing down allowances ( WDAs). WDAs are given to the person holding the relevant interest at an annual rate of 25% on the straight line basis until all the qualifying expenditure has been allowed.

WDAs are not available if the person holding the relevant interest has granted a long lease out of the relevant interest for a premium.

There is a limit on WDA. The WDA for a chargeable period cannot be more than the residue of qualifying expenditure. The residue of qualifying expenditure is the qualifying expenditure that has not been written off.

Example

Tracey incurs qualifying expenditure of £950,000 converting a warehouse that has been disused for 3 years into a restaurant. She claims initial allowance of £450,000. She opens the restaurant and claims WDAs. She gets WDA of £237,500 for 2 years. After 2 years WDA the residue of qualifying expenditure is £25,000 and so Tracey gets WDA of £25,000 in the third year.