380R Relocation allowance

Summary

An allowance (know as a relocation allowance) is available to a person carrying on a relevant trade in an establishment situated within an urban dockland area who incurs relocation expenditure in relocating that trade to an establishment in a new location. The section provides certain rules for calculating the amount of the allowance due.

Details

Relocation allowance

(1) A person carrying on a relevant trade who incurs relocation expenditure in relation to that trade may claim a relocation allowance in respect of that expenditure. (This allowance is not available for expenditure for which industrial buildings or wear and tear allowances may be made but provision is made for accelerating these allowances in a subsequent provision below.)

Allowance in taxing the trade

(2) The relocation allowance is made in taxing the trade. This Part requires that only net costs are allowable.

Part disposal of establishment land

(3) The situation where all or part of the original site from which the operator is moving has not been disposed of is provided for. For the purposes of calculating the allowable costs for the purpose of claiming the relocation allowance the market value of the establishment land, where it is not all disposed of, must be deducted from the relevant expenses.

Full disposal of establishment land

(4) When the establishment land is disposed of, the consideration received and not the market value of the land, is deducted from the relevant expenses before granting the allowance. Enhancement expenditure incurred at any time after all the old installations have been removed is also to be deducted from the consideration received.

Claw back & net-off provisions

(5) Where a relocation allowance has been claimed and a disposal of establishment land subsequently takes place and the aggregate of all consideration received for that land (reduced by any enhancement expenditure) is less than the market value of the land at the date the relevant expenses were first incurred, then a further relocation allowance is to be made in respect of the difference. Similarly, where the consideration received for the establishment land exceeds the market value at the date the relevant expenses were first incurred, the difference is to be treated as a trading receipt of the trade. The extent to which an amount is to be treated as a trading receipt is limited to the aggregate of relocation allowances granted.

Deemed disposal of establishment land

(6) Where an operator ceases the trade at the original site but does not dispose of the site or part of it within two years of cessation, then the site is deemed to have been disposed of for the sum of any consideration received for the part sold and the market value of the part remaining.

Retention of establishment land

(7) The situation where the operator decides to retain the original site or part of it to develop it is provided for. In such a case the land becomes trading stock and section 596(1) applies for the purposes of calculating the relocation allowance or any claw back.

Cessation of a relevant trade

(8) Where the relevant trade ceases before all or part of the original land is disposed of, then, for the purposes of calculating the relocation allowance, the land is deemed to have been disposed of at market value on the date of cessation.

Connected persons

(9) Relief under this Part is allowed in situations where the establishment land is owned by a connected person. The actions of the person who owns the land are deemed to be the actions of the person who is claiming the relief.

Relevant Date: Finance Act 2019