Industrial Buildings Allowance

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imeldabye
imeldabye Registered Posts: 147 Dedicated contributor 🦉
in AAT Level 4 (Level 8 in Scotland)
Ok i am confused.
Do you you just take orginial cost of building, and divide it by number of years available that remain (ie out of 25 years) to get IBA for new owner (and pro-rata it if necessary)
if so, why all the shanninigins (sp?) over written down values and residue before sale in the text book. Please someone enlighten me!

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  • angela27
    angela27 Registered Posts: 40 Regular contributor ⭐
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    Hi Imelda i questioned this today with my tutor as i had come across an example where if you bought a building used, that is you were buying it from someone else then you took the original cost of the building (ie what the seller paid for it) and simply multiplied it by 4%. HOWEVER the kaplan book which i was told to buy takes the written down value of the business (ie the original cost the seller paid for it MINUS all the industrial buildings allowances they claimed) and divide this by the tax life remaining. My tutor has confirmed to me to use the first example but yes it is all pretty confusing! Im tempted to use both examples in my answer since Kaplan and Osbourne have conflicting information.
  • melanie2008
    melanie2008 Registered Posts: 4 New contributor 🐸
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    Industrial Buildings Allowance

    I am studying for the 2009 exams and they do not even cover the Industrial Buildings Allowance as it is not longer examined by the AAt because its being phased out over the next couple of years.
  • imeldabye
    imeldabye Registered Posts: 147 Dedicated contributor 🦉
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    angela27 you have got it in a nutshell. i have found 1 example each of and both are "correct"
    anyone else care to comment?
  • CelticStar
    CelticStar Registered Posts: 142 Dedicated contributor 🦉
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    Just to let you know that many of us who took the BTC exam in June (2008) were also confused by this - although it didn't come up in our exam. I actually contacted the AAT about this and I can confirm that the Kaplan method is the one that is correct.

    I hope that this helps. :001_smile:
  • imeldabye
    imeldabye Registered Posts: 147 Dedicated contributor 🦉
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    that is a BIG help thanks!
  • cs_1988
    cs_1988 Registered Posts: 231 Dedicated contributor 🦉
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    Surely both examples will lead to the same answer. It is just a differant was of working.....

    ie.... A building is bough in 1st November 2000 for 150,000, and has therefor been in use for 8 years.

    Osborne's method = 150,000 x 0.04 = £6000

    Kaplan = (150,000 - (8*6000)) Divided by 17 = £6000

    Either way gets the right answer - Can someone confirm this.

    I think it is a disgrace the two leading books use differant methods. Everything should be standard.

    :mad2:

    Chris

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