Structures & Buildings Allowance (SBA): At a glance

Who can claim the Structures and Buildings Allowance? What expenditure is eligible? How to make a claim? 

Subscribers see Structures and Buildings Allowance (subscriber guide)

This is a freeview 'At a glance' guide to the Structures and Buildings Allowance.

At a glance

• A Structures and Buildings Allowance (SBA) was introduced for qualifying expenditure incurred on or after 29 October 2018.
• The allowance is 3% of cost from April 2020 on a straight-line basis for 33 1/3 years, the allowance rate increased from 2% in April 2020.
• Following the rate increase, the additional amount of the 1% allowance can be claimed to cover the period between 29 October 2018 to 31 March 2020/5 April 2020.
• The building or structure must be used in a qualifying activity.
• The claimant must have an interest (freehold or leasehold) in the land where the asset is constructed.
• The relief is available from when the structure or building is brought into use for the first time for a qualifying activity.
• Where an accounting period is less than a year the allowance is reduced.
• There are no balancing adjustments on sale.
• As with other capital allowances, a claim for the SBA must be made in the tax return.

How do I claim the extra 1% allowance pre-April 2020?

• An additional 1% SBA can be claimed by those who were entitled to an allowance on 31 March 2020 (Corporation Tax)/ 5 April 2020 (Income Tax). subject to certain conditions.
• There are specific transitional rules, see Structures and Buildings Allowance (subscriber guide)

What type of expenditure qualifies for the SBA?

• Capital expenditure on renovations or conversions of existing commercial structures or buildings.
• Repairs incidental to the renovation or conversion of existing commercial structures or buildings.
• Construction and associated costs and fees for new properties.
• Claims are restricted to the lower of:
  • The actual amount of expenditure, which must be evidenced.
  • Market value.

What are qualifying activities?

SBA applies to capital expenditure on structures and buildings used for qualifying activities. Qualifying activities include:  

• A trade, profession or vocation.
• A UK or overseas property business that is not a Furnished Holiday Let business. 

 Structures and buildings include:

• Offices, retail and wholesale premises.
• Walls, bridges and tunnels.
• Factories and warehouses.

Can I claim the SBA on expenditure on dwellings and land?

• No. Expenditure on residential property and other buildings that function as dwellings will not qualify:

How does the SBA apply to leasehold property?

• It depends on the length of the Lease as to who is entitled to the allowance. 

What if my expenditure qualifies for other capital allowances?

• Qualifying expenditure can only be claimed once.
• Where parts of a structure or building qualify for allowances as Plant and machinery or as Integral features and Fixtures the expenditure is not allowed under the SBA.

How do I deal with qualifying expenditure which has multiple uses?

• Where a structure or building has multiple uses, an appropriate proportion of expenditure will qualify for relief.

Do renovations and later additions to the property qualify?

• Capital expenditure after the date when the building enters into use qualifies for a separate allowance with its own 33 1/3 years (this was 50 years prior to Finance Act 2020) period.
• Expenditure must be tracked per year to ensure the correct allowances are claimed.

What about changes in the use of the structure or building?

• Where a structure or building originally used for a qualifying activity has a change of use and becomes a dwelling SBAs cease to be available for the period for which it is in use as a dwelling.

What about when the building or structure is sold?

• Where an asset qualifying for relief is sold, the new owner can claim the allowance if it is used for a qualifying activity. 
• There are no balancing adjustments on disposal.
• Where the SBAs are transferred to a new owner, the amount of the original expenditure may need to be verified if SBA is not already being claimed (via an allowance statement).

What is an allowance statement?

• An allowance statement must be provided by the first owner and to all future owners to enable them to claim the allowances or the qualifying expenditure will be treated as nil.
• An allowance statement is a written statement that contains specific information. 

Anti-avoidance rules

• To ensure relief can be obtained only for genuine business costs on actual construction works, anti-avoidance rules deny or restrict the relief in certain circumstances.

Where can I obtain more information?

• See Structures and Buildings Allowance (subscriber guide) for full details of whether a claim can be made, who can claim, what expenditure is eligible and how to make a claim.

I need more help!

• Contact the Virtual Tax Partner support service for assistance in making capital allowance and other tax claims.

Useful guides on this topic

Plant and Machinery: Allowances
What capital allowances are available on plant and machinery? How do you calculate them? What are qualifying activities?

Annual Investment Allowance (AIA)
What is the Annual Investment Allowance? What are the limits? What expenditure qualifies?

Fixtures: Overview
What are fixtures? How do I claim lost or unclaimed fixtures? When must fixtures be pooled? What is the fixed value requirement?