1. Capital Allowances – Industrial Buildings
Introduction
Certain types of buildings qualify for capital allowances
Referred to as industrial buildings
Two types:
Industrial buildings initial allowances
Industrial buildings writing down (annual) allowance (IBAA)

2. Capital Allowances – Industrial Buildings
Defined in legislation under s.268 TCA 1997
Building or structure in use:
For purposes of a trade carried on in a mill, factory or similar premises
For purposes of a dock undertaking
For purposes of market gardening

3. Capital Allowances – Industrial Buildings
Building or structure in use:
For the intensive production of cattle, sheep, pigs, poultry or eggs
For purposes of a hotel trade
For purposes of a trade in caravan and camping sites
For purposes of recreation of employees by employer carrying on the above trades

4. Capital Allowances – Industrial Buildings
Building or structure in use:
A lab used in relation to extraction of oil, gas or minerals
A business located in certain tax designated areas
Airport management and operation
Aircraft maintenance

5. Capital Allowances – Industrial Buildings
Building or structure in use:
Nursing homes
Childcare facilities
Private hospitals and sports injury clinics
Specialist palliative care

6. Capital Allowances – Industrial Buildings
The cost of the site is specifically disallowed
Cost of site development is allowed;
Preparing, cutting, tunnelling, levelling land and installation of services on the site

7. Capital Allowances – Industrial Buildings
Grant aided expenditure is specifically disallowed (excluding hotels)
For hotels, receipt of grant assistance results in the building not being treated as a qualifying industrial building and no allowances are available

8. Capital Allowances – Industrial Buildings
Excluded from definition of industrial building
Buildings or structures used as a dwelling house
Buildings or structures used as a retail shop
Buildings or structures used as a showroom or office (administrative office not drawing office)
Buildings or structures used for a purpose ancillary to any of the foregoing

9. Capital Allowances – Industrial Buildings
Excluded from definition of industrial building
TCA 1997 provides an exception when the following conditions are met:
The retail shop, showroom or office must be physically part of a larger structure which qualifies, and
The cost of expenditure on the retail shop, showroom or office must not exceed 10% of the gross qualifying expenditure on the total building or structure, inclusive of any grant aided expenditure but exclusive of site cost

10. Capital Allowances – Industrial Buildings
Industrial buildings annual allowance
To qualify for an IBAA the following conditions must be met:
The industrial building or structure must be in use on the last day of the basis period for the purpose of a qualifying trade, and
The person claiming the allowance must own the relevant interest

11. Capital Allowances – Industrial Buildings
Industrial buildings annual allowance rates
Factories, mills and docks – 4%
Hotels, caravan and camp sites – 4%
Nursing homes, hospitals – 15% for first 6 years and 10% in year 7
Childcare facilities – 15% for first 6 years and 10% in year 7

12. Capital Allowances – Industrial Buildings
Industrial buildings tax life
The length of the tax life is period over which capital allowances can be claimed
So, for a factory the IBAA is 4%, giving a tax life of 25 years
If a building is sold after its tax life has expired the vendor does not suffer a balancing charge
If a building is sold before its tax life has expired a balancing allowance/charge calculation must be completed

13. Capital Allowances – Industrial Buildings
Industrial buildings tax life
The purchaser of a second hand building will not be entitled to capital allowances if the tax life of the building has expired
The purchaser of a second hand building will be entitled to capital allowances if the tax life of the building has not expired, and they continue to use the building as a qualifying industrial building

14. Capital Allowances – Industrial Buildings
Industrial buildings tax life
Where the second hand building qualifies for capital allowances, the qualifying cost will be the lower of the price paid and the original cost
The annual allowance available is spread equally over the balance of the remaining tax life of the building