Structures and Buildings Allowance (SBA) - What is the Structures and Buildings Allowance?

The Structured and Buildings Allowance (SBA) is a capital gains allowance introduced in October 2018 for qualifying property expenses

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Announced in the 2018 Autumn Budget, the Structures and Buildings Allowance (SBA) in the UK provides the possibility to claim capital allowance on expenses on qualifying structures and construction.

Why was the Structures and Buildings Allowance introduced?

The announcement of the SBA in October 2018 came with the further explanation of the aim of this tax relief to essentially fill the gap created by the phasing out of the previous Industrial and Agricultural Buildings Allowances that was begun in 2011.

The aim of the new SBA is not only to provide tax relief for qualifying property expenses, but also to help promote and encourage the development of commercial building.

What qualifies for the Structures and Buildings Allowance?

The primary criteria for expenses that qualify for claiming under the SBA is that they must go towards the construction of new buildings or the renovation of buildings that are to go to commercial use.

The building or renovation expenditure must also have started (the stated contract start date or the construction start date) after October 29th, 2018. This is the official start date of the SBA.

It applies to qualifying buildings in the UK, but also to overseas buildings that fall under UK taxation. Costs can involve land alteration or demolitions if necessary for the construction of the commercial use building.

What the Structures and Buildings Allowance means for tax relief

The SBA tax relief is a flat rate of 2% that is calculated based on the amount of the original expense. It can be claimed for qualifying buildings over a 50-year period.

If the building or project is sold before completion, the new owner can continue to claim the SBA based on the original expense. In other words, it is not affected by a change in ownership of the property.

Are there restrictions on the Structures and Buildings Allowance?

There are certain restrictions that must be considered when seeking to claim capital allowance under the Structures and Buildings Allowance. In some cases, properties designed for residential use are not eligible, although there are exceptions such as for student accommodation.

It also isn’t possible to claim SBA on expenditures that are eligible for claim under other tax relief allowances such as the plant & machinery allowance.