Capital Allowances Act 2001 section 302

Qualifying enterprise zone expenditure where section 295 or 296 applies

Section 302 deals with how to calculate the amount of qualifying enterprise zone expenditure when only part of the construction cost of an enterprise zone building was incurred within the enterprise zone time limit, and the building has been purchased unused (either directly or from a developer).

• This section applies where expenditure has been incurred on constructing an enterprise zone (EZ) building, but only part of that expenditure falls within the enterprise zone time limit, and the building has been purchased unused — either where no developer was involved or where a developer sold the building before it was used.
• In these circumstances, only a proportion of the qualifying expenditure counts as qualifying enterprise zone expenditure — not the full amount.
• The qualifying enterprise zone expenditure is calculated using the formula: QE × E ÷ T, where QE is the total qualifying expenditure, E is the portion of construction expenditure incurred within the time limit, and T is the total construction expenditure on the building.
• In effect, the formula apportions the qualifying expenditure in the same ratio as the construction costs incurred within the time limit bear to the total construction costs of the building.