11th April 2019

Business Tax – Structures and Buildings Allowance

Business Tax Update – New Structures and Buildings Allowance

Structures and Buildings Allowance Laws Set To Change

Structures and Buildings Allowance - construction worker on site

The government has published draft legislation for the new Structures and Buildings Allowance (SBA), meaning many businesses can now claim tax relief on new buildings, and purchase or refurbishment of old ones.

Who can claim Structures and Buildings Allowance?

Both companies and unincorporated businesses will be entitled to claim the allowance on qualifying expenditure on commercial buildings and other structures used for their trade, profession or vocation in the UK, or overseas if the business pays tax in the UK property business can claim, but only for commercial not residential property.

Starting date

Only expenditure incurred on or after 29 October 2018 qualifies. The key date here is when the contract is signed, not when construction was started or payment made. Contracts for preparatory work, such as planning and design, which are signed before 29 October 2018 won’t stop you from being entitled to the SBA as long as the construction contract is on or after that date.

How much relief?

The SBA is similar to capital allowances for plant and machinery. It is calculated as 2% of the qualifying expenditure meaning it will take 50 years to get full tax relief. However on a £500,000 building that’s £10,000 of tax relief, so worth having.

Qualifying expenditure

There’s no real definition, but the general principle is that expenditure that can’t be claimed as a deduction against profit, such as an improvement to a property rather than a repair, will qualify.

Leasehold property

Buildings with leases are more complicated, but if you own a property and lease it for a term of 35 years or less, you can claim the allowances. If the lease is for a longer period then the tenant can make the claim.

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