Business Premises Renovation allowance/BPRA (UK)

by **fpdbookkeeping** on Wed Aug 03, 2011 12:49 pm

Hello. Question for anyone with knowledge of BPRA (business premises renovation allowance).

I have been reading the HMRC literature on the subject and it looks on the face of it like a tennant might be able to claim BPRA for work done on an industrial unit adding an office space and putting it in order to do work (the area is an assisted one). There are a couple of questions though that are concerning me:

1, Can BPRA be claimed by a tennant who has carried out leasehold improvements where the business is in a short lease (18 months)? (This almost certainly will be renewed)

2, If the answer to 1, is yes, will the existence of a dilapidations clause in the lease scupper the claim (since effectively everything would have to be ripped out at the end, therefore removing the rennovation)?

3, Are there any implications if the unit leased is a sub unit within a larger industrial building? (1 unit within a long row). Although this unit may have been empty, I doubt the other ones on the site will have been. I've seen some reference somewhere that an unused floor in an office building would qualify if brought back into use, but want to check on this point. So my question is therefore, for the purposes of BPRA, does the whole building have to be unused for 12 months before the rennovation, or can it just be the individual part of the building?

The tennant moved into an industrial unit and in order to start work/ the business, they had to do some work to it (mainly installing a small office in one corner). I'm reasonably sure this won't count as plant/fixtures (as most of it is internal walls) and I'm just trying to figure out if there is any way to gain tax relief on this expenditure. The unit was in fairly poor condition before they moved in so I'm guessing it may have been vacant for more than 12 months before they started the refurb work (would have to check). As noted above, it is located in an "assisted area", and is part of a row of units on an industrial estate. This one may have been empty but I doubt the others were.

Any help on this would be greatly appreciated as I have been reading a lot of material on HMRC and much of it as usual is not very clear.

Thank you.

Peter

by **section 44** on Wed Aug 03, 2011 1:42 pm

fpdbookkeeping wrote:1, Can BPRA be claimed by a tennant who has carried out leasehold improvements where the business is in a short lease (18 months)? (This almost certainly will be renewed)

Yes. However, the lease ending within 7 years of the premises being brought back into use would trigger a balancing charge.

by **fpdbookkeeping** on Wed Aug 03, 2011 1:51 pm

section 44 wrote:
fpdbookkeeping wrote:1, Can BPRA be claimed by a tennant who has carried out leasehold improvements where the business is in a short lease (18 months)? (This almost certainly will be renewed)

Yes. However, the lease ending within 7 years of the premises being brought back into use would trigger a balancing charge.

Ok that's great thanks. I assume when you say "lease ending within 7 years" that can be 7 years comprising more than one period of renewal (as I mentioned above, the first lease is 18 months here as they didn't want to commit to a longer one untill they were sure the business would work).That presumably would work in the same way as a balancing charge for any other fixed asset - add on the original allowance to the taxable amount.

Any ideas about the other items?