Our customers.

Structural Buildings
Allowance.

For qualifying expenditure where you purchased or leased a structure, and all construction contracts were signed on or after 29th October 2018, you could be entitled to claim the Structural Buildings Allowance (SBA).

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Capital Allowances are specifically allowed by legislation and all qualifying businesses are entitled to them.

Structural Buildings Allowance (SBA) in deeper detail

The 3% Structural Buildings Allowance gives commercial property owners the ability to claim against capital expenditure for new builds or renovation of commercial structures and FHL’s, as well as associated fees. While it is not as generous as the faster-depreciating rates for plant and machinery, it’s worth mentioning that the expenditure qualifying for SBA will often represent the largest part of the expenditure incurred on a non-residential building. It will also become a more significant proportion of the total annual allowances the longer the asset is held.

Here is a breakdown of the considerations and limitations of completing a robust Capital Allowances claim through the Structural Building Allowance.

Structures and buildings include:

• Offices, retail and wholesale premises.

• Walls, bridges and tunnels.

• Factories and warehouses.

What are qualifying activities?

• A trade, profession or vocation.

• A UK or overseas property business that is not solely a Furnished Holiday Let business.

The property must:

• Not have been used as a residence during the period, you’re claiming for.

• Be used for a qualifying activity.

• Have an allowance statement.

Costs that you can claim under this allowance include:

• Structure design cost.

• Preparing the site for construction of structure.

• Building or renovating a structure.

• The amount you spent on construction costs, even if you lease the structure from somebody else (this only includes long lease interests).

• If you buy the structure unused from a developer, you can claim the Structures and Buildings Allowance on the price you paid to the developer, after deducting items you cannot claim for.

• Claims are restricted to the lower of:

o The actual amount of expenditure which must be evidenced.

o Market value.

The applicable rate for Structural Buildings Allowance

If your business is subject to Corporation Tax

For purchases of new buildings or property enhancements between 29th October 2018 and 1st April 2020, the rate is set at 2%.

You may claim 3% a year from 1st April 2020 on qualifying costs. The allowance period will end thirty-three and one third years from the later of:

• the date the structure first came into non-residential use.

• the date on which the qualifying expenditure is incurred.

If your business is subject to Income Tax

For purchases of new buildings or property enhancements between 29th October 2018 and 6th April 2020, the rate is set at 2%.

You may claim 3% a year from 6th April 2020 on qualifying costs. The allowance period will end thirty-three and one third years from the later of:

• the date the structure first came into non-residential use.

• the date on which the qualifying expenditure is incurred.

If the structure was sold by a developer, or has been sold more than once and you’re the first person to use it, you can claim the Structural Buildings Allowance on the lower of either the price:

• paid to the developer when they sold it

• you paid for the structure

You cannot claim on costs:

• for any residence or any structure located in the grounds of a residence.

• which also qualify for plant and machinery allowances.

• you’ve already used to claim another allowance.

• for other items included in the price of the structure, such as land, integral features, and fixtures.

• for planning permission.

• for financing, such as loans.

• for public enquiries or legal expenses.

• for landscaping or land reclamation.

• for which you received a grant or contribution.

Example:

If you were to purchase a hotel for £6m you will likely find that approximately £2m of the acquisition is deemed to have been for items of embedded plant and machinery and is therefore eligible for Capital Allowances. However, the further £4m (after deducting land costs) could be perfectly eligible for claiming Structural Buildings Allowance at 3%. This gives you around £60,000 in Structural Buildings Allowances alone.

To find out more about the Structural Buildings Allowance / Capital Allowances please feel free to get in touch, or why not try our Capital Allowances calculator.

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