What are the three conditions for industrial buildings allowances under section 271 of the Capital Allowances Act 2001?

Section 271 requires three conditions: first, there must be expenditure on constructing a building or structure; second, the building must be used for a qualifying trade, be a qualifying hotel, a qualifying sports pavilion, or a commercial building in an enterprise zone; third, the expenditure must count as qualifying expenditure under the legislation.

Who is entitled to claim industrial buildings allowances under United Kingdom law?

The allowances are given to the person who holds the relevant interest in the building at the time. If the building changes hands, the new holder of the relevant interest becomes the person entitled to claim allowances going forward, subject to the rules on transfers and residual expenditure set out in Part 3.

What does 'industrial building' mean in Part 3 of the Capital Allowances Act 2001?

Throughout Part 3, the word 'building' is shorthand for 'building or structure'. An 'industrial building' is defined as any building or structure that satisfies the qualifying use conditions — namely being used for a qualifying trade, as a qualifying hotel, a qualifying sports pavilion, or as a commercial building in an enterprise zone.

Can industrial buildings allowances be claimed on a building intended for but not yet in qualifying use?

Yes. In the case of an initial allowance, it is sufficient that the building is intended to be put to a qualifying use. The building does not need to be already in use for a qualifying trade, as a qualifying hotel, a qualifying sports pavilion, or as a commercial building in an enterprise zone at the time of claim.

Capital Allowances Act 2001 section 271

Industrial buildings allowances

Section 271 sets out the basic conditions that must be met for industrial buildings allowances to be available and defines key terms used throughout the rest of Part 3 of the Act.

Allowances require expenditure on constructing a building or structure that is used for a qualifying trade, is a qualifying hotel, a qualifying sports pavilion, or a commercial building in an enterprise zone
The construction expenditure (or other relevant expenditure) must count as qualifying expenditure
Throughout Part 3, the word "building" is shorthand for "building or structure", and an "industrial building" is any building or structure falling within the qualifying categories
Allowances are given to whoever holds the relevant interest in the building at the time, as determined by the rules on relevant interests and qualifying expenditure

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