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Illustrative Example
- Owner A incurred cost of $250 million on the construction of an industrial building and started to use the building on 1 April 1970. It is assumed that no initial allowance was claimed by Owner A.
- Owner A sold the building to Owner B for $300 million on 1 April 2017.
- Owner B sold the building to Owner C for $400 million on 1 April 2030.
- Owners A, B and C all close their accounts on 31 March. Owners B and C acquired the building for business use since the year of acquisition.
| Owner A | $ million | |
| 1/4/1970 | Cost of construction | 250 |
| 1970/71 - 1994/95 | Annual allowance ($250 million x 1/25 x 25) | (250) |
| 1/4/2017 | Residue of expenditure immediately before the sale | 0 |
| Sale proceeds | (300) | |
| Balancing charge on Owner A (limited to the aggregate of allowances granted) |
250 |
| Owner B | ||
| 1/4/2017 | Residue of expenditure immediately before the sale | 0 |
| Balancing charge on Owner A | 250 | |
| Residue of expenditure immediately after the sale | 250 | |
| 2017/18 - 2023/24 | Annual allowance | 01 |
| 2024/25 - 2029/30 | Annual allowance ($250 million x 4% x 6) | (60) |
| 1/4/2030 | Residue of expenditure immediately before the sale | 190 |
| Sale proceeds | (400) | |
| Balancing charge on Owner B (limited to the aggregate of allowances granted) |
60 |
| Owner C | ||
| 1/4/2030 | Residue of expenditure immediately before the sale | 190 |
| Balancing charge on Owner B | 60 | |
| Residue of expenditure immediately after the sale | 250 | |
| 2030/31 | Annual allowance ($250 million x 4%) | (10) |
| 240 |
| 1 | No annual allowance was granted to Owner B as the 25-year period after the year of first use has lapsed. |