Business Premises Renovation Allowance (BPRA) was introduced by the Finance Act 2005 as an incentive to bring derelict or unused properties back into life. The BPRA was designed to run for a period of 5 years from 11 April 2007 and therefore only has a few short months left to run.
As with many incentive allowances, there are strict regulations governing which properties qualify for the BPRA. Firstly, the property has to be situated within a designated disadvantaged area and have been unused for a period of a year before conversion or renovation work begins. Secondly, the premises cannot have been used as a dwelling prior to becoming disused and in addition there is a list of relevant trades such as shipbuilding or primary production of certain agricultural products which will not qualify for BPRA.
Provided the building satisfies the other criteria, BPRA is available for capital expenditure incurred in:
• converting a qualifying building into qualifying business premises,
• the renovation of a qualifying building that is, or is to be, qualifying business premises, and
• repairs to a qualifying building.
One example of a qualifying conversion provided by HMRC is the conversion of warehouse premises into an hotel. In certain circumstances where only a part of a building has been disused, BPRA may be applied for that part of the building. However, the allowance is not available for extending buildings or for the capital expenditure on purchasing land. So, whilst conversion may qualify, adding a basement or additional upper floor would not.
There are a number of schemes available for investors to provide funding for business premises renovation, thereby enabling investors to benefit from the allowances available. For example, one current scheme anticipates investor deposits to be in the region of 33% with tax relief for 50% tax payers anticipated to be in the region of 43% of the gross investment, leaving investors in a cash positive position.
As tax mitigation specialists Newshams are able to give advice on tax matters, including BPRA, how tax may affect any private or business transaction and how to put in place an effective mitigation strategy.
Contact us now on 020 7470 8820 and ask to speak to a tax adviser about the benefits of investing in a BPRA scheme or e-mail us at firstname.lastname@example.org and we’ll get straight back to you.
10 February 2012