Flat Conversion Allowances

This is intended to encourage urban regeneration and is available for expenditure incurred converting the upper storeys of commercial buildings into flats.

Flat conversion allowances provide a 100% initial allowance in the year the expenditure is incurred, or if it is preferred by the taxpayer, 25% per annum on a straight line basis. They are particularly valuable because they are unusually available for residential property and all expenditure incurred qualifies, unlike commercial plant & machinery allowances.

Expenditure must be incurred on the conversion, renovation, or incidental repairs of a ‘qualifying building’ into a ‘qualifying flat’.

A ‘qualifying building’ must have been built before 1980, have less than four upper storeys which were originally intended to be used for residential purposes, and all or most of its ground floor must be authorised for certain types of business use (including shops, offices, food outlets etc.).

A ‘qualifying flat’ must be in a qualifying building, not be accessed through the business part of the ground floor, have no more than four rooms (excluding kitchens, bathrooms, halls etc.), not be a ‘high value’ flat (by reference to a table of notional rents) and be suitable for and held for the purpose of short-term letting.