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An unexpected announcement in the 2018 budget was the creation of a new type of capital allowance called the structure and buildings allowance (SBA).

It’s been a long time coming as businesses were becoming frustrated that most capital expenditure on commercial premises didn’t benefit from any tax relief because the assets weren’t machinery or plant under the old tax law. The aim of the SBA is to address this and bring the UK into line with competitor nations.

What is the SBA allowance?

Businesses that incur capital expenditure on structures and buildings used for qualifying activities will be able to claim the SBA. It essentially gives you a 2% flat rate relief over 50 years to encourage investment in the construction of new structures and buildings and the improvement of existing ones.

What can be claimed?

SBA claims will be based on the original construction cost of the qualifying structure or business, and there is no minimum spend level.

When must the expenditure be incurred?

The relief will not be available for structures or buildings where the contract for the physical construction works was entered into before 29 October 2018.

Which buildings or structures will qualify?

The relief is available for a building or structure used in a trade, profession, vocation, UK or overseas property business (but not a furnished holiday let business) or in managing the investments of a company with an investment business. However, property and buildings that function as dwellings will not qualify.