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may write off the residue of the expenditure over the balance of the 25-year period.427 A person buying a qualifying hotel unused is treated as having incurred expenditure on its construction when the purchase price becomes payable.428 The hotel must be a ‘qualifying hotel’, a concept which is elaborately defined.429 The hotel may be outside the UK but the trade must be taxed under schedule D, case I. The allowance does not extend to the costs of dwelling accommodation for the owner but accommodation for staff is treated as part of the hotel.430 It follows that accommodation which would be disqualified as being for the owner may qualify if the trade were incorporated and so the accommodation was for a director or employee. There are special rules for calculating the balancing adjustments if the hotel has ceased to be a qualifying hotel for more than 2 years before the balancing event occurs.431 |
24A.3.7.2 Dwelling Houses—Assured Tenancies |
Allowances may also be given for the cost incurred before 1 April 1992 in the construction of ‘qualifying dwelling houses’ which, broadly speaking, must be let on assured tenancies within the meaning of the Housing Act 1980, section 56 or its successor in part I of the Housing Act 1988.432 Although it is not necessary for the landlord to be a company for the purposes of the assured tenancy scheme, the landlord must be a company if capital allowances are claimed under these provisions. This is now contained in Part 10 of the 2001 Act A writing down allowance of 4% per annum is given, and balancing allowances and charges apply as appropriate.433 Expenditure for which capital allowances have been given under these provisions is not deductible when computing any allowable loss for CGT purposes on the disposal of the building.434 |
24A.4 Agricultural Land |
| An allowance may be claimed by a person with a relevant interest in agricultural land who incurs capital expenditure on the construction of a building such as a farmhouse, farm building or cottage, fences and other works, eg drainage.435 The allowance is a writing down allowance over 25 years, ie 4% p.a.436 The relevant interest means the freehold or leasehold interest of the person incurring the expenditure. Further rules ignore the creation of a sub-lease, the merger of a leasehold interest with a superior interest and the ending of one lease if it is followed by a new one for the same lessee.437 |
| For expenditure incurred before 1 April 1987 under a contract entered into before 14 March 1984 the allowances comprised an initial allowance of 20%, followed by a straight line writing down |