Capital Allowances Act 2001 section 360S

Treatment of demolition costs

Section 360S explains how demolition costs for qualifying buildings are treated for the purposes of flat conversion allowances, ensuring that net demolition costs are added to the residue of qualifying expenditure rather than being treated as expenditure on any replacement property.

• The section applies where a qualifying building is demolished and the person who originally incurred the qualifying expenditure also bears the demolition costs.
• The net cost of demolition — being the demolition cost less any proceeds received for the remains of the building — is added to the residue of qualifying expenditure immediately before the demolition takes place.
• If the proceeds from the building remains equal or exceed the demolition cost, there is no net cost to add to the residue.
• Neither the gross demolition cost nor the net demolition cost can be treated as expenditure on any replacement property for the purposes of any part of the Capital Allowances Act.