IR37                                      29 November 1994

             INDUSTRIAL BUILDINGS ALLOWANCES

The Chancellor proposes in his Budget to clarify the
amount upon which capital allowances for buildings may be
claimed (including buildings in Enterprise Zones).

The Chancellor's intention is to confirm the current
interpretation of the law.

                         DETAILS

1.   Purchasers of buildings can pay for more than just
the cost of the building. The purchase price often includes the
provision of associated benefits (such as rental guarantees).

2.   The intention is to define the amount qualifying for
allowances as the price paid for the relevant interest minus 
(a) the value of the land element and (b) any value attributable 
to elements over and above those which would feature in a normal 
commercial lease negotiated in the open market.

3.   The proposed measure is in line with existing practice.

4.   A copy of the clause which will be included in the Finance Bill
can be obtained from:

     Business Profits Division
     Room 427, 22 Kingsway
     London, WC2B 6NR    Telephone 071 438 6235

                    NOTES FOR EDITORS

The capital allowances system provides tax relief in respect of the
depreciation of most business assets, including machinery and plant
(at the rate of 25 per cent per annum, reducing balance) and
industrial and agricultural buildings (written off over the first 25
years of life, usually at 4 per cent per annum). Expenditure on
buildings in enterprise zones is eligible for an initial allowance of
100 per cent.