What does section 295 of the Capital Allowances Act 2001 cover?

Section 295 determines qualifying expenditure when a newly constructed building is sold before its first use and no property developer is involved. The purchaser's qualifying expenditure is capped at the lower of the purchase price actually paid and the original construction cost of the building under United Kingdom law.

How is qualifying expenditure calculated under section 295 when a building is sold before first use?

Qualifying expenditure is the lower of two figures: the capital sum the purchaser actually paid and the original cost of constructing the building. This prevents claims on inflated prices exceeding actual construction costs, while also limiting allowances to the amount genuinely spent by the purchaser.

What happens if a building is sold more than once before first use under section 295?

When a building is sold multiple times before anyone uses it, only the last sale before first use gives rise to qualifying expenditure. Earlier purchasers who bought and sold the building while it remained unused do not obtain qualifying expenditure under this section of the Capital Allowances Act 2001.

When is qualifying expenditure treated as incurred under section 295?

The qualifying expenditure is treated as incurred by the purchaser at the date the capital sum became payable. This timing rule determines the chargeable period in which the purchaser can first make a capital allowances claim for the unused building purchased under United Kingdom law.

Capital Allowances Act 2001 section 295

Purchase of unused building where developer not involved

Section 295 sets out how qualifying expenditure is determined when a newly constructed building is sold before it has ever been used, in circumstances where no property developer is involved in the sale.

Where a building is sold before its first use and no developer is involved, the purchaser can claim capital allowances based on qualifying expenditure
Qualifying expenditure is the lower of the price actually paid by the purchaser and the original construction cost of the building
The qualifying expenditure is treated as incurred by the purchaser at the point when the purchase price became payable
If the building changes hands more than once before it is first used, only the final sale before first use gives rise to qualifying expenditure

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