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The Structures and Buildings Allowance (SBA): what we know so far

9th August, 2019

The Autumn Budget 2018 announced the introduction of a new capital allowance called the Structures and Buildings Allowance (SBA). In this blog, Nottingham chartered accountants Clayton and Brewill provides an overview of SBA, looking at what we know so far about this new capital allowance.

An overview

The Structures and Buildings Allowance (SBA) will provide relief for spending on the construction of commercial – but not residential – property. It will be given at a flat rate of 2% per annum over a period of 50 years. Special provisions will apply on disposal, with any remaining benefit passing to the purchaser.

structures and buildings allowanceThe SBA provides relief for spending incurred on or after 29 October 2018 on commercial buildings and structures where:

  • construction of the building or structure begins on or after 29 October 2018
  • expenditure is ‘qualifying expenditure’ and is for construction or acquisition costs on or after 29 October 2018
  • the building or structure is not in residential use

The government hopes that SBAs will encourage investment and enhance the UK’s competitive advantage. Detailed legislation is expected to be finalised over the summer.

Who can claim SBA?

In principle, the person incurring construction expenditure on a building or structure will be entitled to claim SBAs. This is providing they have an interest in the land (known as ‘relevant interest’) and are carrying on a qualifying activity. An interest in the land must be held when the qualifying expenditure is made. There will sometimes be more than one person eligible to claim SBAs. For example, where someone with a freehold interest incurs construction costs and a leaseholder incurs capital expenditure on renovations.

Qualifying expenditure

Capital expenditure on renovations or conversions of part of a building or structure qualifies for SBA. It is treated as if it were capital expenditure on the construction of that part of the building or structure for the first time. This means such enhancement expenditure will have to be dealt with separately, and each set of expenditure will get its own 50-year time clock.

Not all spending will attract relief. Spending to acquire land or rights in or over land, or spending on altering land are costs which do not qualify for SBA. Fees, stamp duty and incidental costs attributable to acquiring land are thus not allowable. Neither is spending on planning permission, fees and related costs, or spending on the provision of plant and machinery.

Qualifying activities and qualifying use

To attract relief, a structure or building’s use must be for specified business purposes. Essentially, a ‘qualifying activity’ is a trade, a profession or vocation. An ordinary UK or overseas property business would also constitute a qualifying activity; the charge to tax must be in the UK, but the relief will be available for property overseas.

Residential use does not qualify for SBA. This includes buildings used as:

  • A dwelling house
  • A prison
  • Residential accommodation for school pupils
  • Residentials accommodation for the armed forces
  • Student accommodation – defined as either purpose-built or converted accommodation which is available for student occupation for at least 165 days each calendar year.

Particular attention to the detail of the rules is needed with care home accommodation. A care home providing personal care necessary because of old age, disability, mental health, alcohol or drug-related issues will qualify for relief – if it isn’t providing these services, it will not qualify.

It can sometimes be the case that a building or structure has mixed non-residential use, and only a part is used for eligible purposes. In this case, the rules specify that apportionment can be made on ‘a just and reasonable basis’. It is important to note, however, that this does not extend to the use of a residential property for business.


There are special provisions regarding disposals. No balancing allowance or charge is given. Instead, the purchaser acquires the remaining SBA for whatever is left of the initial 50-year period, and the SBA is still based on the original purchase cost. It is also not adjusted for any increase in value that may have arisen.

The rules regarding demolition have changed in the period since the SBA was first announced. Demolition normally results in a deemed disposal of the building, and a disposal and reacquisition of the underlying interest in land for the calculation of capital gains. In principle, any unrelieved SBA will be claimed as a deduction in the capital gains calculation.

Keeping the right evidence

The importance of creating and keeping the right documentation to substantiate a claim for the SBA cannot be overstated. In order to create an initial claim for the SBA, the owner must make an ‘allowance statement’, which comprises a written statement of the date of the earliest written contract for:

  • the construction of the building or structure
  • the amount of qualifying expenditure incurred on its construction or purchase
  • the date on which it is first brought into non-residential qualifying use.

In addition, other supplementary information may also be required by HMRC, and this will usually have to be passed on to any subsequent owner.

Businesses will, therefore, need to keep detailed records of expenditure, with separate analysis of any subsequent expenditure, e.g. on renovations. Additionally, multiple assets will each need individual documentation, setting out costs from acquisition and construction to improvement and disposal.

How we can help

As the SBA is introduced, Clayton and Brewill can help you maximise claims and identify areas where you might be eligible for the Structures and Buildings Allowance (SBA). We can also advise on the record-keeping requirements of the new regime. Please do get in touch to discuss the new SBA or any other matter relating to capital allowances – you can contact us here or call 0115 950 3044.


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