Businesses that incur capital expenditure on bringing qualifying business premises back into use can claim 100% Business Premises Renovation Allowances (BPRA). Qualifying business premises are those situated in disadvantaged areas and which have been unused for over a year.
Balancing adjustments will be made if a balancing event, such as the sale of the building, occurs within seven years of the date that the premises were first brought back into use or made suitable and available for letting.
Changes, which take effect from 1 April 2014 for companies and from 6 April 2014 for unincorporated businesses, will clarify the scope of qualifying expenditure for BPRA. The proposed revisions mean that relief is only available for the actual costs of construction and building work and for certain specified activities such as architectural and surveying services. Associated activities such as project management services will also be available for relief but will be restricted to 5% of the actual costs.
In addition to these revisions the following will also apply
- BPRA will not apply if another form of State aid has been or will be received;
- The proposal to limit qualifying expenditure to integral features has been widened to cover additional items;
- The rules relating to the one year where the property has been unused will be clarified;
- Where expenditure is paid in advance and tax relief claimed immediately, the works must be completed within 36 months; and
The balancing adjustments period will reduce from seven to five years.
Although the changes are intended to simplify the relief, they will mean that business owners will need to exercise greater care in identifying expenditure that qualifies for BPRA. The reduction in the balancing adjustment period to five years will be a welcomed improvement to the relief.