Capital Allowances Act 2001 section 323

Adjusted net cost

Section 323 defines how to calculate the "adjusted net cost" of a building when a balancing event occurs, by apportioning the net cost according to the proportion of the ownership period during which the building qualified as an industrial building or was used for research and development.

• The adjusted net cost is calculated as (S − P) × I / R, where S is the starting expenditure and P is the proceeds from the balancing event.
• The formula apportions the net cost by the ratio of qualifying days (I) to total days of ownership (R) during the relevant period.
• Qualifying days are those on which the building was classified as an industrial building or was used for research and development.
• The "relevant period of ownership" used in this calculation is defined separately in section 321 of the Act.