B3.271 Introduction and entitlement to structures and buildings allowance
A form of capital allowance, the structures and buildings allowance (SBA), is available for expenditure on the construction of commercial (non-residential) buildings and structures. The relief extends to capital expenditure on the improvement of existing structures and buildings, including converting existing premises to qualifying business use. The detailed rules are contained in regulations made by statutory instrument under powers conferred on the Treasury by the Finance Act 20191.
The allowance is available for eligible construction costs incurred on or after 29 October 2018, at an annual rate of 3% (2% before 1 April 2020 for corporation tax and before 6 April 2020 for income tax), on a straight-line basis2. Relief is available for UK and overseas structures and buildings, where the business is within the charge to UK tax. Residential property and other buildings that function as dwellings, such as school and military accommodation, do not qualify. Capital expenditure on renovations or conversions of existing commercial structures or buildings do, however, qualify. The cost of land or rights over land, and the costs of obtaining planning permission, are not eligible for relief.
There is no system of balancing charges or balancing allowances on a subsequent disposal of the asset; instead the purchaser can continue to claim the annual allowance of 3% of original cost. The allowance claimed by the seller is added to the disposal