Draft legislation has been published for the new Structures and Buildings Allowance which differs from the original proposals announced in October 2018.

At Budget 2018 the chancellor announced the introduction of a new Structures and Buildings Allowance (SBA) for the construction costs of non-residential structures and buildings to be provided on eligible construction costs:

  • Incurred on or after 29 October 2018
  • At an annual rate of two percent on a straight-line basis
  • Once the property is brought into qualifying use.
  • With no balancing adjustments on disposal of the property

The original proposals provided that allowances would be paused during periods of temporary disuse, however, following consultation, this was determined to be too complex to manage and has been removed from the draft legislation. Instead, allowances will continue even when the qualifying use of the property ceases, except where the property is instead used for non-qualifying purposes (such as residential use) in which case allowances will not be available.

The proposals also provided that allowances could continue to be claimed when a building is demolished. This has also been removed in the draft legislation. Instead, on the demolition of a building for which the allowances are being claimed:

  • SBA’s will cease and
  • Capital gains tax relief will be available for any unclaimed SBA’s.

Finally, the draft legislation introduces two new provisions:

  • any expenditure incurred on repairs incidental to qualifying renovation or conversion works will be deemed to be capital and will be within the SBA rules.
  • The property owner who incurs the qualifying construction cost must produce an “allowance statement” and this must be provided to all subsequent owners to enable them to claim SBA’s. Without this statement the qualifying expenditure will be treated as nil.

Links to our guides:

Structures and buildings allowance (SBA)

External Links:

Capital allowances for structures and buildings - draft secondary legislation with introductory note

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