The Business Premises Renovation Allowance (BPRA) allows 100% capital allowances to be claimed on the cost of conversion of derelict or unused business premises – dependent upon specific conditions being met. One condition is that relief is only available for renovating or converting disused business premises in what is designated a ‘disadvantaged area’ (as specified in the Assisted Areas Order 2007).
If the full allowance is not claimed then a writing down allowance is available at 25% annually (25% of the initial qualifying expenditure) on a straight-line basis.
There is a ‘balancing charge’ adjustment if a specific ‘balancing event’ occurs within seven years, e.g. sale of property. The balancing charge will arise if proceeds received exceed the amount of allowance claimed.
Example:
Emily buys a derelict shop and renovates it, converting it into a cafe. The renovation costs £150,000 for which she makes a claim for 100% relief. After four years she sells the cafe for £200,000 – the sale is deemed a ‘balancing event’ as it occurs within seven years.
A ‘balancing charge’ arises – the residue on sale is nil as all of the allowance has been claimed. The proceeds of sale exceed the initial claim so the charge is capped at £150,000.
NOTE: The ‘take up’ for this scheme has been so good that HMRC has extended the scheme to April 2017.
Please register or log in to add comments.
There are not comments added