Capital Allowances Act 2001 section 340

Treatment of demolition costs

Section 340 explains how demolition costs are treated for capital allowances purposes when a building is demolished and the person bearing those costs is the same person facing a potential balancing allowance or balancing charge.

• The section applies where a building is demolished and the person incurring the demolition cost is the same person on whom a balancing allowance or charge is or might be made.
• The net cost of demolition — being the demolition cost less any money received for the remains of the property — is added to the residue of qualifying expenditure immediately before the demolition.
• This addition to the residue means the net demolition cost obtains tax relief through the industrial buildings allowances framework.
• Neither the demolition cost nor the net demolition cost may be treated as expenditure on a replacement property under any other Part of the Act, except for Part 10 dealing with assured tenancy allowances.