Capital Allowances Act 2001 section 496

Interest acquired on completion of construction

Section 496 deals with how the relevant interest in a building is determined when a person funds the construction and only acquires their interest in the building once construction is completed.

• Where a person pays for the construction of a building but only obtains an interest in it upon or as a result of completion, they are treated as having held that interest from the time the expenditure was incurred.
• Without this rule, there could be no relevant interest at the point the construction costs were spent, because the person had no formal interest in the building at that time.
• The absence of a relevant interest could prevent the person from claiming capital allowances on the cost of constructing the building.
• In practice, this provision is unlikely to have a significant current impact for flat conversion allowances, as qualifying expenditure and the relevant interest will almost certainly have been established many years ago.