Owner-Managed Businesses

Structures and buildings allowance

Produced by Tolley
  • 05 Jan 2022 14:50

The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Structures and buildings allowance
  • What is structures and buildings allowance (SBA)?
  • What expenditure qualifies for SBA?
  • SBA’s on the acquisition of building
  • Renovations, conversions and repairs
  • Plant and machinery and SBA
  • Who can claim SBA?
  • SBA ― qualifying activity
  • SBA and meaning of residential use
  • Amount of SBA
  • More...

Structures and buildings allowance

What is structures and buildings allowance (SBA)?

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

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