A new Structures and Buildings Allowance (SBA) has become available from 29th October 2018 for businesses incurring qualifying costs on new, non-residential structures and buildings. We have examined the implications and benefits of this tax relief for UK businesses.
First announced at Budget 2018 and introduced under the Finance Act 2019, the aim of the SBA is to relieve construction costs for new qualifying buildings and structures, including new conversions or renovations. This will support business investment in this area, whilst in turn boosting the UK’s capital allowances system from a global perspective.
Since the phasing out of the old industrial buildings allowance in 2011, capital allowances have not been available for expenditure on structures and buildings. With the introduction of the SBA, where the first construction contract for the building or structure in question was entered into on or after 29th October 2018, the allowance is now available on qualifying expenditure; that is, on the construction of commercial property that is not eligible for capital allowances for plant, machinery or integral features. SBA will still be given for periods during which properties fall into disuse.
This tax relief will be given at a rate of two percent per annum on a straight-line basis. A technical note released at the time of last year’s Budget highlights the rest of the key features of the allowance.
Senior Manager Lee Morton explains: “This tax relief can be expected to have a positive effect on UK business, as it will encourage businesses entitled to the allowance to consider investing – or increasing their investment – in the construction, conversion and renovation of non-residential structures and buildings.
“For further details on the SBA and to clarify any uncertainties surrounding qualifying costs and properties, demolitions and leases, we would recommend seeking professional advice and referring to HMRC’s website.”