Capital Allowances Act 2001 section 311

Calculation of allowance after sale of relevant interest

Section 311 explains how the writing-down allowance for an industrial building is recalculated after a relevant event such as a sale of the relevant interest or a change arising from an additional VAT liability or rebate.

• After a relevant event, the writing-down allowance is recalculated using a formula that spreads the remaining qualifying expenditure over the unexpired portion of the original 25-year writing-down period.
• The formula is: residue of qualifying expenditure multiplied by the length of the chargeable period, divided by the time remaining from the date of the event to the end of the 25-year period that started when the building was first used.
• A relevant event is either a sale of the relevant interest in the building that triggers a balancing adjustment, or an event involving an additional VAT liability or VAT rebate.
• If more than one relevant event occurs, the writing-down allowance is recalculated afresh each time using the same formula, based on the updated residue of qualifying expenditure at that point.