Announced at Budget 2018 the Government has introduced a new Structures and Buildings Allowance (SBA) for new non-residential structures and buildings. The allowance for structures and buildings was introduced in order to fill a gap in the current capital allowances system, where no relief has been available for most structures and buildings, although capital allowances are available for plant and machinery that form ‘integral features’ of buildings. The relief was also introduced to encourage investment in the construction of new structures and buildings and the improvement of existing business properties.
Businesses that incur qualifying capital expenditure on structures or buildings used for qualifying activities will be able to claim the SBA. The eligible construction costs must be incurred on or after 29 October 2018, with relief given at an annual rate of 2% on a 50 years straight-line basis. The relief will be available to businesses chargeable to income tax and companies chargeable to corporation tax.
- Relief will be available for new commercial structures and buildings, including costs for new conversions or renovations.
- Relief is available for UK and overseas structures and buildings, where the business is within the charge to UK tax.
- Relief will be limited to the costs of physically constructing the structure or building, including costs of demolition or land alterations necessary for construction, and direct costs required to bring the asset into existence.
- Relief is available for eligible expenditure incurred where all the contracts for the physical construction works were entered on or after 29 October 2018.
- Claims can only be made from when a structure or building first comes into use.
- Land costs or rights over land will not be eligible for relief, nor will the costs of obtaining planning permission.
- The claimant must have an interest in the land on which the structure or building is constructed.
If you would like to discuss your own commercial building and the possible tax benefits
available to you, then please contact us.