Tx notes fa22 Final

purchase
of a building, rather than the 
construction
of 
a building then 
no
SBA will be available unless the question explicitly states that it is able to be 
claimed.

---

57
Only on 
OpenTuition
you can find: Free ACCA notes 
•
Free ACCA lectures 
•
Free ACCA tests 
•
Free ACCA tutor support 
•
The largest ACCA community
June 2023 to March 2024 exams
Watch free ACCA TX lectures
Illustration 1 
A trader prepares accounts to 31 March in each year and on 31 October 2022 bought a new 
warehouse from the builder at a cost of £240,000 which included the land valued at £90,000. The 
warehouse was then used in the trade from 1 January 2023.
The qualifying expenditure is £150,000 (240,000 – 90,000) and the 3% SBA will be available from 1 
January 2023 so that for the year ended 31 March 2023 a SBA of £1,125 (150,000 x 3% x 3/12) will 
be available. From the year ended 31 March 2024 a full SBA of £4,500 will be claimable.
On the sale of the building there is no balancing adjustment for the vendor but instead any 
allowances claimed will be added to the sale proceeds of the building in computing any chargeable 
gain or allowable loss arising on the sale.
The SBA will again be time apportioned in the accounting period of sale up to that date.

---

58
Only on 
OpenTuition
you can find: Free ACCA notes 
•
Free ACCA lectures 
•
Free ACCA tests 
•
Free ACCA tutor support 
•
The largest ACCA community
June 2023 to March 2024 exams
Watch free ACCA TX lectures
Illustration 2 
Assume that the trader in Illustration 1 continues to use the building in his trade until 30 September 
2024 at which date the warehouse is sold for proceeds of £300,000 including £120,000 for the land.
The trader will have claimed the following amounts of SBA during his period of use of the property:
Although chargeable gains are dealt with later in these Study Notes, the basic calculation of a 
chargeable gain is a simple one – deduct the allowable cost of an asset from its sale proceeds – but 
in this situation the sale proceeds of the property (including land) will be increased by the capital 
allowances claimed of £7,875. The chargeable gain on the sale would therefore be computed as:
The trader buying the property will simply continue the same 3% claim on the original cost of the 
building – in this example £4,500 in each accounting year. If the buyer prepared accounts to 30 June 
in each year and immediately brought the property into use on 1 October 2024, then it would have 
been purchased in the accounting year ended 30 June 2025 and for that period would have been 
used in the trade for a period of 9 months and would therefore give rise to a claim of £3,375 (9/12 x 
£4,500). 
From the year ended 30 June 2026 a full annual WDA of £4,500 would be claimed until all of the 
original qualifying cost had been claimed.
If renovation expenditure was incurred on a qualifying building from 6 April/1 April 2021, it too will be 
eligible for SBA again from the date the building was brought back into use. This SBA claim would 
be entirely separate to any claim (if available) for the original cost of the building.
Year ended 31 March 2023 (as above)
£1,125
Year ended 31 March 2024 (as above)
£4,500
Year ended 31 March 2025 (£4,500 x 6/12)
£2,250
Total allowances claimed
£7,875
Sale Proceeds (300,000 + 7,875)
£307,875
Less: Allowable cost 
(£240,000)
Chargeable Gain
£67,875

---

59
Only on 
OpenTuition
you can find: Free ACCA notes 
•
Free ACCA lectures 
•
Free ACCA tests 
•
Free ACCA tutor support 
•
The largest ACCA community