Taxes Consolidation Act 1997 section 278

Manner of making allowances and charges

Section 278 sets out how industrial building allowances and balancing charges are to be given effect, whether by deduction in computing trade profits, against rental income, or by way of discharge or repayment of tax.

• Where the claimant carries on a trade, allowances are deducted from (and balancing charges added to) the trade profits; where the claimant is a lessor taxed under Case V, allowances and charges are made against that Case V rental income.
• Where a lessor's interest in the building is subject to a lease and the lessor is not taxed under Case V, industrial building allowances, writing-down allowances and balancing allowances are given by way of discharge or repayment of tax, and any balancing charge is assessed under Case IV.
• Allowances given to a lessor outside the trading context are available primarily against the rental income from the building — under Case V if taxed there, or under Case IV if taxed there — including against any balancing charge under the same Case.
• If the allowances exceed the lessor's rental income for a year, the excess may be set against total income for the same year by election within 24 months of the year end, with any remaining balance carried forward against future rental income.