42 |
| 24A.3.3.5 Initial Allowance: Licence as Good as Lease |
| A licence is particularly useful for those starting up small workshops and businesses, since the obligations of a licensee are normally less onerous than those of a lessee—an important consideration if cash problems are an issue. Previously, where industrial property was only occupied by someone (S) for the purposes of S’s trade under a licence, S had no property interest and could not therefore claim any industrial buildings allowances. The legislation was therefore extended to cover licensees. Today, where an owner, O, or a lessee, L, grants a licence to S, S’s interest is treated as if it is subject to a lease, thus allowing S to claim any initial allowances.393 |
| Claims for allowances can also be made where the premises are occupied by more than one licensee provided all the licensees are carrying on industrial businesses.394 |
| 24A.3.4 Initial Allowances: Enterprise Zones |
| CAA 2001 only deals with initial allowances in relation to enterprise zones.395 This is presumably because initial allowances are not otherwise available, having been repealed at the behest of Nigel Lawson in the 1980s. Expenditure qualifies for the initial allowance only if incurred where the site of the building is in an enterprise zone, and the expenditure was incurred not more than 10 years after the site was first included or up to 20 years if the contract was entered into in those first 10 years.396 |
The rate of allowance is 100%; at one time this was reduced to 75% for certain regional development expenditure but this is now obsolete.397 Allowances are available not only for industrial buildings and hotels, but also for all other commercial buildings used for trading or professional purposes—other than dwelling houses.398 |
Further provisions are designed to ensure that the purchaser of a building buying it after the expiry of the 10-year period but before the building is brought into use is entitled to the initial allowance.399 Similarly, where buildings are sold once within 2 years of being brought into use there is a balancing charge or allowance on the seller.400 These allowances are available only for expenditure incurred within the first 10-year period,401 or is contracted for within that 10 year period but only if actually incurred within 20 years after the site first became part of an enterprise zone.402 |