Industrial Buildings Allowances

Industrial Buildings Allowances

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A client company bought an industrial building (it is all qualifying, of that I'm sure).  They paid £1m on 1 April 2009 and the residual value b/f from the previous owner (at their year end of 31 March) was £800,000 after 3 years of use (exactly).

My approach was going to be to take the remainder of the 25 years (i.e. 22 years) and give the allowances over that.  So £36,364 per year (4.54% per year).  But once we pass 1 April 2008 the claimable rate drops from 4 to 3 etc..., so does that mean my 4.54% is now 3.54%, or is it 3.41% (75% of the original 'full' claim)? 

I've read CA31205 and am none the wiser, in fact I am more confused now... 

I'm awash in a sea of confusion!

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By dunhamsjd
15th Feb 2012 17:04

No balancing event after 1 March 2007

There are no balancing events after 21 March 2007.  This means the residue before sale is the same as the residue after sale and so your client will claim the 4% WDA the vendor had been claiming subject to the reductions for the phasing out from 2008 -2011. Have a read of CA350050.

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Replying to Retiring Accountant:
Quack
By Constantly Confused
16th Feb 2012 09:10

Thanks

So, it's as 'simple' as taking the residue at the purchase and continuing to claim 4% of the original cost (which we know), or as the case may be 3%/2%/1%.  So effectively the same allowances are claimed whether the building changes hands or not (based on the big picture), it's just WHO claims them that matters.

Well that makes things MUCH easier!

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