What is BPRA?
The Business Premises Renovation Allowance (BPRA) was brought in to incentivise individuals and/or companies to bring certain properties back into use. BPRA provides 100% initial capital allowance for qualifying costs on renovation and conversion of unused commercial properties in designated areas. However, this is a temporary tax incentive and is only available for expenditure incurred before 11th April 2012.
BPRA and Self Storage
BPRA is good news for operators of self storage who are looking for new stores or already have stores in qualifying areas. Quite often, operators chose to adapt existing premises rather than build bespoke units and where a suitable property is identified in a qualifying area, the operator could make significant savings by recovering a large proportion of the costs incurred in adapting property for self storage use, which is typically a cost intensive exercise. Driver Jonas LLP is well placed to advise on this, as we are leaders in the field of Self Storage and also have considerable knowledge and experience of tax related property issues, such as BPRA.
What Premises Qualify?
The expenditure (conversion, renovation or repair) must be incurred to make the property a qualifying business premises. ‘Premises’ means any building or structure. Qualifying business premises must be used or available and suitable for use for the purpose of a trade, profession or vocation, or as an office or offices. Premises cannot be used, or be available for use, as a dwelling. Neither can they be used (either wholly or in part) for a relevant trade. Relevant trades are those listed in Commission Regulation (EC) No 1628/2006 and include:
• the fisheries and aquaculture sector
• the shipbuilding sector
• the coal industry
• the steel industry
• the synthetic fibres sector
Qualifying expenditure is capital expenditure incurred on or after 11th April 2007 and before 11th April 2012 on the following:
• Converting a qualifying building into qualifying business premises
• Renovating a qualifying building if it is or will be qualifying business premises
• Repairing a qualifying building to the extent that such expenditure is incidental to the conversion or renovation described above.
What Are The Specified Disadvantage Areas?
The areas where buildings must be located in order to attract the allowance are those designated as “disadvantage areas”. Examples of the areas (amongst others) include certain areas located around:
• London Thames Gateway
• Newcastle & North Tyneside
• Northern Ireland
How Does A Building Qualify?
A qualifying building is a building or structure that:
• Has been unused for at least 12 months, and;
• Is located in a ‘specified disadvantaged area’ on the date on which conversion or renovation work began.
The above conditions apply to the whole of a building where the expenditure relates to a part of the building, if that part had been used in conjunction with the whole of the building.