Business premises renovation allowance (‘BPRA’)
 

Background
BPRA is a state aid introduced in April 2007 and is aimed at the regeneration of disadvantaged areas. The initial period of the scheme was for 5 years but this was subsequently extended for a further 5 years until 31 March 2017.


Overview

BPRA is a 100% first year tax saving on qualifying expenditure and can be claimed on capital expenditure incurred on or in connection with the conversion or renovation of a building in a disadvantaged area.

To qualify for BPRA you must incur qualifying expenditure when you:

  • convert a qualifying building into qualifying business premises
  • renovate a qualifying building that is or will be qualifying business premises
  • repair qualifying business premises

Renovation
Qualifying expenditure

BPRA expenditure includes:

  • building work
  • architectural/design
  • survey/engineering services
  • planning applications
  • statutory fees eg cost of building regulations
    but not solicitors’ fees


Qualifying conditions

In order to qualify for BPRA the following conditions must be satisfied:

  • the last use of the premises was not as a dwelling
  • the premises are located in a disadvantaged area
  • the premises have been unused for at least a year prior to refurbishment work
  • the expenditure is incurred by an entity holding a relevant interest
  • the property is a qualifying business premises, broadly for use in a trade, profession or vocation that is not a relevant trade


Disadvantaged area

  • areas in Great Britain specified by the Assisted Areas Order 2014 (SI 2014/1508)
  • Northern Ireland

    If the postcode is available the postcode database can be used


Relevant interest

  • freehold
  • long leasehold
  • short leasehold but note the 5 year clawback rule - see below


Relevant trade

A relevant trade is one of the following sectors and these do not qualify for BPRA:

  • fisheries and aquaculture, aquaculture is activities such as fish farming
  • shipbuilding
  • the coal industry
  • the steel industry
  • synthetic fibres
  • the primary production of certain agricultural products
  • the manufacture or marketing of products which imitate or substitute for milk and milk products
  • an undertaking in difficulty for the purposes of the General Block Exemption Regulation 651/2014 (a company is in difficulty if its latest accounts are not produced on a going concern basis)
  • an undertaking subject to an outstanding recovery order (a recovery order applies where an undertaking is in receipt of state aid that’s been declared illegal by the Commission and are subject to an outstanding recovery action, ie they still need to repay the illegal aid)
  • energy, distribution and infrastructure
  • broadband networks
  • the transport sector


Capital Allowances

Once it has been established that the project qualifies for BPRA, Capital Allowances can be claimed on the whole of the expenditure incurred either as a:

  • 100% initial allowance in the year of expenditure or
  • 25% allowance on the straight line basis for 4 years.

However, if the property is disposed of within 5 years of the expenditure being incurred (was 7 years) there is a clawback of the tax relief claimed.