Capital Allowances Act 2001 section 328

Balancing adjustment on realisation of capital value

Section 328 provides for an additional balancing event where capital value is realised in respect of a building that is, or has been, an industrial building in an enterprise zone, and sets out how any resulting balancing charge is calculated.

• A balancing event is triggered whenever capital value is realised while a building is an industrial building or after it has ceased to be one, but this type of balancing event can never give rise to a balancing allowance — only a balancing charge.
• Capital value is realised when a payment of capital value is made that is attributable to a subordinate interest in land (such as a lease) to which the relevant interest in the building is, or will become, subject.
• The amount of capital value realised is treated as the proceeds from the balancing event, and this figure is determined in accordance with the rules for attributing capital value to the subordinate interest.
• Where a balancing event under this section occurs, the starting expenditure used to calculate future balancing adjustments is reduced by the capital value realised, and if the relevant interest is later sold subject to a subordinate interest, any uplift to the net sale proceeds is itself reduced by any capital value previously realised before the sale.