What is qualifying expenditure under section 292 of the Capital Allowances Act 2001?

Section 292 defines qualifying expenditure for industrial buildings allowances by listing five categories: capital expenditure on constructing a building, purchasing an unused building without developer involvement, purchasing an unused building from a developer, and two categories covering buildings sold within two years of first use involving all or part enterprise zone expenditure.

What are the five categories of qualifying expenditure for industrial buildings allowances?

The five categories are: construction expenditure on a building; purchase of an unused building not involving a developer; purchase of an unused building sold by a developer; purchase within two years of first use where all expenditure is qualifying enterprise zone expenditure; and purchase within two years of first use where only part is enterprise zone expenditure.

How do enterprise zones affect qualifying expenditure under section 292?

Enterprise zones were designated areas offering enhanced tax reliefs to encourage investment. Under section 292, buildings sold within two years of first use can retain qualifying expenditure status if the expenditure is wholly or partly qualifying enterprise zone expenditure. This preserved the tax relief when buildings changed hands shortly after first use.

Can the purchase of a newly built but unused factory count as qualifying expenditure?

Yes. Purchasing a newly built but never-used factory can constitute qualifying expenditure under section 292. It falls within the second or third category depending on whether the seller is classified as a property developer. Either way, the purchase price can qualify provided the relevant detailed conditions for that category are satisfied.

Capital Allowances Act 2001 section 292

Meaning of "qualifying expenditure"

Section 292 defines what counts as "qualifying expenditure" for the purposes of industrial buildings allowances by listing the five categories of expenditure that can qualify.

Qualifying expenditure includes capital spent on constructing a building, or purchasing an unused building (whether or not a developer was involved in the sale)
It also covers the purchase of a building sold unused by a developer
Expenditure on a building sold within two years of first use can qualify where all of the expenditure is qualifying enterprise zone expenditure
Expenditure on a building sold within two years of first use can also qualify where only part of the expenditure is qualifying enterprise zone expenditure

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