Capital Allowances Act 2001 section 270BH

Market value rule

Section 270BH prevents excessive expenditure from qualifying for structures and buildings allowances by capping the allowable amount at market value.

• Any expenditure that exceeds market value is treated as "excluded expenditure" and cannot qualify for structures and buildings allowances.
• Where the qualifying expenditure relates to purchasing an interest in a building or structure, the cap is the market value of that interest.
• In all other cases, the cap is the "market value amount" — what it would have been normal and reasonable to spend on the works, services, or other matters in question.
• The market value amount is assessed based on prevailing market conditions at the time the expenditure was incurred, assuming the transaction took place at arm's length in the open market.