The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
From 29 October 2018, expenditure on constructing a non-residential building or structure, or in certain cases, expenditure on acquiring such a building or structure, qualifies for an SBA.
Except where the enhanced rate for freeport tax sites applies, SBA is given at an annual rate of 3% (from 1 April 2020 for corporation tax and 6 April 2020 for income tax, prior to April 2020 the rate was 2%), of the qualifying expenditure on a straight-line basis over 33 and 1/3 years, as a deduction in calculating the taxable profits of a trade or other qualifying activity.
The 3% rate can be claimed on all expenditure, even where the building or structure was bought into use before April 2020. Where a chargeable period spans 1 April 2020 (corporation tax) or 6 April 2020 (income tax) the rate of 2% will apply for days before the relevant date and 3% for the days after that date. Any shortfall in allowances due to a business claiming 2% prior to April 2020 can be claimed in the last chargeable period in which an allowance is available, ie when the period of 33 and 1/3 years ends, but only if the business which held the building on 1 April 2020 (corporation tax) or 6 April 2020 (income tax) still holds the same interest in the building at the end of the 33 and 1/3 years.
An enhanced rate of SBA applies to expenditure on buildings or structures in a freeport tax site. SBA is given at an annual rate of 10% of the qualifying expenditure on a straight-line basis over 10 years. The rate will apply where the first contract for construction is entered into on or after the date the tax site is designated, and the building or structure must be brought into qualifying use before 1 October 2026.
Unlike other capital allowances, there is no system of balancing
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