Capital Allowances Act 2001 section 272

Expenditure on the construction of a building

Section 272 clarifies what counts as expenditure on the construction of a building for the purposes of capital allowances, specifically addressing the treatment of land costs and repair expenditure.

• Expenditure on the construction of a building does not include the cost of acquiring land or rights in or over land
• Capital expenditure on repairs to part of a building is treated as if it were expenditure on constructing that part for the first time
• Repair expenditure incurred for trade purposes is treated as capital expenditure if it cannot be deducted as a revenue expense when calculating trading profits
• The effect is that non-deductible repair costs may qualify for capital allowances as construction expenditure