Structure & Buildings Allowances

With changes to Capital Allowances in 2018, The HM Treasury allowed the expenditure incurred on elements of structure and building to attract Structure & Buildings Allowances (SBA).

Expenditure must be on the construction, renovation or repairs of a building or structure, or where a previous owners have claimed a SBA allowance they are only available on the acquisition of non-residential structures and buildings. The buildings or structures can be located in the UK or overseas.

The structure must be used for a qualifying activity, which is taxable in the United Kingdom. Qualifying activities are:

  • any trades, professions and vocations
  • a UK or overseas property business (except for residential and furnished holiday lettings)
  • managing the investments of a company
  • mining, quarrying, fishing and other land-based trades such as running railways and toll roads.

SBAs are available where an individual or company entering into a construction contract after 29th October 2018 may be able to claim SBAs.  Allowances will be available on a straight-line 3% per annum (over 33.3 years) with no balancing adjustment on sale, with relief under SBAs commences on the first day of qualifying use of the property.  However, the amount of the SBA claim may increase any capital gain on a subsequent sale because it will be added to the disposal proceeds.

SBAs are only available in respect of expenditure incurred on construction, renovation, conversion or repairs incidental to renovation or conversion. These include fees for design, preparing the site for construction, construction works, renovation, repair and conversion costs and fitting out works.

It is important that all other forms of Capital Allowances, such as Plant & Machinery – Main Pool and Integral Features – Special Rate Pool are identified and pooled separately as they cannot be included as part of the SBA allowance.

SBAs cannot be claimed for the cost of the land purchase.

Acquiring a new property

(Construction / Refurbishment Contract Post 29 October 2018).

SBAs are claimed through the self assessment tax return, but can only be claimed where a n 'allowance statement' has been prepared. 

The first individual or company to use the structure must create a written allowance statement which must include:information to identify the structure, such as address and descriptionthe date of the earliest written contract for constructionthe total qualifying coststhe date the structure started to be used for a non-residential activity.Acquiring a used building (Construction / Refurbishment Contract Post 29 October 2018)

The buyer of a used structure will only be able to claim the balance of available SBA allowances if they obtain a copy of the allowance statement from the previous owner.

The buyer should be able to take over claiming the allowances for the remainder of the 33.3 year period, providing it is using the building or structure for a qualifying purpose.

Disposing of the Property SBAs cannot be claimed after you have disposed of the building or structure. The disposal will not give rise to a balancing allowance or charge for the seller. However, the amount of the SBA claim may increase any capital gain on a subsequent sale because it will be added to the disposal proceeds.

Jex Capital Allowances are able to not only identify the appropriate asset pool within which to class the Plant & Machinery – Main Pool and Integral Features – Special Rate Pool but also utilise our construction knowledge and surveying skills to identify Structure & Building Allowances, and produce the appropriate Allowance Statements arising from the expenditure identified.Jex Capital Allowances provide a HMRC compliant analysis and report on capital allowance claims, clearly identifying their relevance to the clients business or trade, for submission with self-assessment tax returns.

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