What is the initial allowance available under section 360G of the Capital Allowances Act 2001?

Section 360G provides an initial allowance of 100% of qualifying expenditure incurred on a qualifying building. This means the full cost of the building can potentially be relieved in a single chargeable period, offering an immediate and significant tax deduction to the claimant.

Can a claimant elect to reduce the initial allowance under section 360G?

Yes, a claimant does not have to take the full 100% initial allowance. They may elect to reduce it to a specified lower amount. This flexibility is useful where taxable profits are insufficient to absorb the full allowance, or where the claimant wishes to preserve expenditure for writing-down allowances in later periods.

When is the initial allowance under section 360G given?

The initial allowance is made for the chargeable period in which the qualifying expenditure is incurred. This means relief is available in the same period as the expenditure, providing an immediate tax benefit rather than spreading the deduction over multiple future periods.

Why might a company choose not to claim the full 100% initial allowance?

A company may choose a reduced initial allowance if its taxable profits are lower than the qualifying expenditure. For example, with £500,000 expenditure but only £300,000 profits, the company could claim £300,000 and preserve the remaining £200,000 for writing-down allowances in future periods.

Capital Allowances Act 2001 section 360G

Initial allowances

Section 360G entitles a person who incurs qualifying expenditure on a qualifying building to claim an initial allowance of up to 100% of that expenditure.

A person who incurs qualifying expenditure on a qualifying building is entitled to an initial allowance
The initial allowance is 100% of the qualifying expenditure
The claimant may elect to reduce the allowance to a specified lower amount
The allowance is given for the chargeable period in which the qualifying expenditure is incurred

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