Capital Allowances Act 2001 section 360Z1

Giving effect to allowances and charges: lessors and licensees

Section 360Z1 explains how flat conversion allowances and charges are given effect when the building owner has leased or licensed the property to someone else during the relevant period.

• This section applies where a person is entitled to an allowance or liable to a charge, but their interest in the building is or was subject to a lease or licence during the chargeable period.
• If the building interest is already an asset of an existing property business, the allowance is treated as an expense and any charge as a receipt of that business when calculating its profits.
• If the building interest is not an asset of an existing property business, the person is treated as if they were carrying on a property business, with the allowance as an expense and any charge as a receipt of that notional business.
• The effect is that flat conversion allowances and charges always flow through a property business calculation, whether or not the person actually operates one.