Section 198 election
A section 198 election is a joint agreement between the buyer and seller of a commercial property that fixes the value attributed to the fixtures for capital allowances purposes. It is made under section 198 of the Capital Allowances Act 2001, must usually be entered into within two years of the buyer acquiring the property, and once made it is irrevocable.
Worked example
A shop is sold and the contract includes a section 198 election setting the fixtures value at £1. The buyer later finds this severely limits the allowances they can claim. Because the election is binding and the two-year window is tight, the fixtures position needs checking before contracts are signed, not after.
Related: Capital allowances on commercial property transactions
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