| Phasing out of Industrial and Agricultural Building | | | | acquisition or disposal of a building before 21 March |
| Allowance | | | | 2007, except there is only a balancing adjustment if |
| The announcement of the plan to phase out Industrial | | | | there has been an election. If no election is made then |
| Buildings Allowance (IBA) and Agricultural Buildings | | | | the new holder inherits the former holders written |
| Allowance (ABA) came as a major surprise in Budget | | | | down allowance entitlement. For post 21 March 2007 |
| 2007. | | | | disposals, an election can still be made but no balancing |
| Balancing Adjustments | | | | adjustment is made for the vendor and the value |
| When a person ceases to have the relevant interest in | | | | (again original cost less allowances claimed) before |
| an industrial building there is a balancing event. Under | | | | sale becomes the value after sale. |
| the old law, this normally gave rise to a balancing | | | | Annual Allowances |
| adjustment based on any difference between the | | | | The rates of the annual written down allowance are to |
| residue value and the proceeds from the event. | | | | be reduced from 4% by 1% a year over the period |
| Broadly speaking there was a balancing allowance if | | | | April 2008 to April 2011 when the allowance is to be |
| the asset was sold for less than the value (value = | | | | abolished. When a business has a year end straddling |
| original cost less allowances claimed) and a balancing | | | | the financial year end the allowance will be time |
| charge if sold for higher than the value. The new | | | | apportioned. |
| owner was also allowed to continue claiming the | | | | This abolishment will have a detrimental effect on |
| allowance (allowance was limited to 25 years after | | | | businesses that have invested large sums of money in |
| first use). | | | | buildings in recent years. When in April 2011 a large |
| Balancing adjustments and allowances have been | | | | proportion of relief will disappear. |
| abolished as from 21 March 2007 unless it is in respect | | | | To deal with the change it is always a good idea to |
| of qualifying enterprise zone expenditure or in | | | | consult an online accountant to ensure you are claiming |
| pursuance of a “relevant pre commencement | | | | all allowances available. For more online accountancy |
| trade”. In broad terms this means a written contract, | | | | information you can access a free online accountancy |
| made before 21 March 2007. | | | | knowledge database. |
| For agricultural buildings the same rules apply on the | | | | |