This is an at a glance free view guide to the Structures and Buildings Allowance. Subscribers see 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.
  • It applies for both income tax and corporation tax.
  • The allowance is 3% (as proposed in Finance Bill 2020) of cost on a straight-line basis for a 50-year period.
  • It applies to qualifying expenditure incurred on or after 29 October 2018.
  • There are no balancing adjustments on sale.
  • The building or structure must be used in a qualifying activity (see below).
  • The claimant must have an interest in the land where the asset is constructed (freehold or leasehold).
  • 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.
  • As with other capital allowances a claim for the SBA must be made in the tax return.

What's New?

From April 2020:

  • The Finance Bill 2020 proposes that the Structures and Building Allowance rate is increased from 2% to 3%.
  • Full relief for qualifying spend will be available over 33⅓ years rather than 50.
  • This applies to all qualifying spend incurred on non-residential buildings on or after 29 October 2018 where the structure or building has been brought into use and not just to new spend from April 2020.
  • Policy paper: Increase in Structures and Buildings allowance for capital allowances.
  • Draft legislation

From 11 March 2020:

  • There are provisions to deny double relief where research & development allowances are available.

Retrospectively, from 29 October 2018:

  • There can be reliance on verbal construction contracts as well as those in writing.
  • Relief will be available for the first day of qualifying use.
  • Simplified calculations can be used for all qualifying non-residential structures or buildings.


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:  

 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:

  • See Structures and Buildings Allowance for what counts as a dwelling and certain types of properties which may still qualify for relief despite having some residential use.
  • Expenditure on acquiring land or rights over land does not qualify for relief.

How does the SBA apply to leasehold property?

What if my expenditure qualifies for other capital allowances?

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.
  • See Structures and Buildings Allowance for what is classed as multiple use, how to apportion expenditure, what use may be ignored, and how to deal with shared areas in buildings.

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 50 year allowance 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 periods of disuse, change of use, damage to and demolition of  the property?

What happens when there is qualifying expenditure by a person not chargeable to tax?

Where construction costs are incurred by anyone not in the charge to UK tax:

  • Notional allowances are calculated and deducted from the qualifying expenditure.
    • See Structures and Buildings Allowance for how a future owner who is within the charge to UK tax calculates what allowances they are entitled to after acquiring the property.

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.
    • Our subscriber guide sets out how to compute the capital gain on the disposal of an asset upon which the SBA has been claimed.
  • 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. 

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.

Links to our useful guides:

Structures and Buildings Allowance
guide to the Structures and Buildings allowance, who can claim, what expenditure is eligible and how to make a claim.

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?

Comments (2)

Rated 2.5 out of 5 based on 1 voters
This comment was minimized by the moderator on the site

Thanks for sharing the details.

This comment was minimized by the moderator on the site

Thanks for the summary - I think the rate needs changing?

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