276 Application of sections 272 and 274 in relation to capital expenditure on refurbishment

Summary

In general, capital allowances in respect of industrial buildings or structures apply over the particular “tax life” (or writing-down life) of the building or structure and this life commences on the date the building or structure first comes into use. However, in the case of allowances granted in respect of capital expenditure incurred on the refurbishment of an industrial building or structure, section 276 provides that the particular tax life of the building or structure in relation to that expenditure commences from the date on which such expenditure is incurred and not from the date the building or structure was first used.

Details

Definition

(1) “refurbishment” is any work of construction, reconstruction, repair or renewal which is carried out in the course of repair or restoration, or maintenance in the nature of repair or restoration, of a building or structure. Specifically, this includes work involving the provision or improvement of water, sewerage or heating facilities.

Tax life of refurbishment expenditure

(2) Where capital expenditure is incurred on the refurbishment of an industrial building or structure, then, sections 272 (writing-down allowances) and 274 (balancing allowances and balancing charges) are to apply as if “the capital expenditure on refurbishment of the building or structure was incurred” were substituted for “the building or structure was first used” in each place where it occurs in section 272(4) and section 274(1)(b). This secures that, in the case of allowances granted in respect of capital expenditure incurred on the refurbishment of an industrial building or structure, the tax life of the building or structure in relation to that expenditure commences from the date on which that expenditure is incurred and not from the date the building or structure was first used.

Apportionment

(3) In applying this section when computing a balancing allowance or a balancing charge, apportionment of the sale, insurance, salvage or compensation moneys is to be made between refurbishment expenditure and construction expenditure on a just and reasonable basis.

Relevant Date: Finance Act 2019