Taxes Consolidation Act 1997 section 342

Capital allowances in relation to construction or refurbishment of certain commercial premises

Section 342 provides capital allowances for capital expenditure incurred during the qualifying period on the construction or refurbishment of certain commercial premises in designated areas, and on the refurbishment of such premises fronting onto designated streets.

• Qualifying premises must be wholly within a designated area or front onto a designated street, be used for a trade or profession (or be let on bona fide commercial terms), and must not be a dwelling house or, subject to exceptions, an office.
• Three allowances apply: a 2% annual writing-down allowance, a 25% industrial building initial allowance, and 50% free depreciation for owner-occupiers, with an overall cap of 50% on the expenditure that can be written off.
• For premises fronting onto designated streets, only refurbishment expenditure qualifies, the building must have existed on 1 August 1994, and qualifying residential expenditure under sections 347, 348 or 349 must also have been incurred on the existing building.
• No balancing charge arises if the triggering event occurs more than 13 years after the premises was first used, or more than 13 years after the refurbishment expenditure was incurred.