OCTOBER 2016 - Business Premises Renovation Allowance (BPRA)
The BPRA scheme closes on 31 March 2017 for companies and 5 April 2017 for unincorporated businesses and therefore those wishing to take advantage of the scheme who have yet to do so should be aware that time is running out.
What is BPRA?
BPRA was originally introduced in April 2007 and was aimed to incentivise businesses to bring former shops and business premises back into use. It is a 100% first year tax saving on qualifying expenditure meaning that businesses can claim 100% of qualifying costs against taxable profits in the year the expenditure is incurred. Alternatively if the full 100% isn’t claimed, 25% of the balance can be claimed in each of the next four years.
BPRA is also a state aid and where more than €500,000 is received a year under the scheme details will be published on the European Commission website.
What expenditure qualifies?
Only expenditure which is incurred on or in relation to the conversion or renovation of a qualifying building into a qualifying business premises can be claimed.
In order to qualify a building must be:
- empty for at least 12 months before work begins
- must be in a designated disadvantaged area
- must have been last used as a commercial property and not a dwelling
- must remain as business premises following conversion/renovation
Expenditure that qualifies for relief is:
- building work
- architectural and design services
- surveying or engineering services
- planning applications
- statutory fees and permissions.
The costs of acquiring land, extending a building or developing land beside a building do not qualify for BPRA.
Expenditure on plant and machinery which may qualify separately for capital allowances doesn’t qualify for BPRA unless it’s a fixture eg. fire alarm systems. Further examples of this type of expenditure can be found on the HMRC website - https://www.gov.uk/guidance/business-premises-renovation-allowance-bpra
What is a designated disadvantaged area?
Only buildings situated in designated disadvantaged areas are eligible for relief. Disadvantaged areas are areas in Great Britain specified by the Assisted Areas Order 2014 and Northern Ireland. Postcodes can be checked using http://www.ukassistedareasmap.com/ieindex.html
Clawback of relief
If a property is sold, demolished or ceased to be used for qualifying purposes within 7 years (5 years for expenditure incurred from 1 or 6 April 2014) after it was first used following conversion or renovation there will be a clawback of relief.
If you would like any further information please call 0141 221 2984 or email Alasdair Cairns.