Revenue Note for Guidance
This section provides for a scheme of capital allowances in respect of capital expenditure incurred on or after 1 January 2019 by employers on the construction or refurbishment of a building or structure used for the provision of childcare services or the facilities of a fitness centre to employees. The building must be for the exclusive use of the claimant's employees but where the claimant is a company, employees of a connected company may also use the services and facilities.
Qualifying expenditure is written off over a 7-year period by way of annual allowances at the rate of 15 per cent per annum for 6 years and 10 per cent in year 7.
(1) “childcare services” are defined as any form of childminding services or supervised activities to care for children, whether or not they are provided on a regular basis. These services must meet the requirements (as applicable) of the Child Care Act 1991 (Early Years Services) Regulations 2016.
“construction” has the same meaning as it has in section 270 and includes refurbishment.
“fitness centre” is defined as a gymnasium used exclusively for the provision of a range of facilities designed to improve and maintain the physical fitness and health of participants.
“qualifying expenditure” is defined as expenditure incurred on the construction of a qualifying premises by an employer, carrying on a trade or a profession.
“qualifying premises” is defined as a building or structure in use for the purposes of providing childcare services or fitness centre facilities to employees of an employer, which is not accessible nor available for use by the general public and, where the employer is a company, the employees of that company or a company connected with that company.
(2) The provisions governing industrial buildings capital allowances are applied to qualifying expenditure as if the qualifying premises were a factory or similar type premises in which a trade is carried on.
(3) Qualifying expenditure incurred may be written off over 7 years at the rate of 15 per cent per annum for the first 6 years and 10 per cent in year 7. The tax life (the period during which the relief attaching to the premises can be transferred to a new owner) of a qualifying premises in relation to qualifying expenditure incurred on its construction is 7 years from its first use subsequent to the incurring of that expenditure.
(4) Where a sale or other event which might give rise to a balancing allowance or charge under section 274 occurs in relation to a qualifying premises, a balancing allowance or charge is not to be made if that event occurs more than 7 years after the qualifying premises was first used subsequent to the incurring of the qualifying expenditure.
(5) Relief shall not be given in respect of capital expenditure incurred on the construction of a qualifying premises, under any other provision of the Tax Acts where relief is given by virtue of this section.
(6) Undertakings in difficulty are excluded in accordance with the 2014 EU Commission Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty.
Relevant Date: Finance Act 2021