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Tax Relief on Structures and Buildings

The introduction of a new Structures and Buildings Allowance represents the most significant change to the capital allowances regime since the abolition of Industrial Buildings Allowances.

The SBA will be available for new construction expenditure on non-residential buildings and structures and will be given over 50 years at a rate of 2% per annum. It will also be available for the acquisition of new properties from developers that meet the relevant criteria with land being the only excluded element. 

Claiming SBA

SBA will be available to businesses which are carrying on a qualifying activity and will be available at a rate of 2% per annum on a straight-line basis, over a fixed 50-year period, starting from when the structure or building comes into qualifying use.

Unlike capital allowances on plant and machinery, there will not be a system of balancing charges or balancing allowances on a disposal of the asset. Instead, the purchaser will continue to claim the annual allowances of 2% of the original cost. In order to transfer the benefit of allowances, businesses will need to keep records of the expenditure incurred on the works and expenditure attributable to the land.

If relief is not claimed, it will not be able to be carried forward to a later period and will be lost. There will be notional allowances for businesses that are not within the charge to UK tax.

SBA will be available for capital expenditure on structures and buildings brought into use for a qualifying activity. This includes a UK or overseas property business that is an ordinary business for the purposes of the Capital Allowances Act 2001. Where an asset is constructed for a qualifying activity that has not yet commenced, expenditure will not qualify if incurred more than seven years before that qualifying activity commences.

Expenditure on residential property and other buildings that function as dwellings will not qualify for SBA. In this case, “dwellings” are buildings intended or used for long-term residence, including university or school accommodation. Hotels and care homes will qualify for SBA. For properties where there is mixed use, the relief will be reduced by apportionment, but SBA will not be available where 10% or less of the costs incurred would meet the conditions for the relief. The definition of “dwelling” for the purposes of the relief is to be consulted on.

Expenditure on land or acquiring rights over land will not qualify for relief. This includes legal costs, SDLT or costs in relation to a planning permission. Where a structure or building is acquired from a developer, an apportionment of the purchase cost from the developer will be required to separate the amount of the cost that is attributable to the land. The eligible costs will be the overall acquisition cost less the value of the land acquired. Relief for expenditure on an overseas structure or building will be available on the same basis as for a UK structure or building.


Relief will not be available for structures or buildings where a contract for the physical construction works has been entered into before 29 October 2018. In relation to speculative building and those structures or buildings constructed “in house”, relief will also not be available where the construction activity began before 29 October 2018.

Anti-avoidance rules will apply to prevent manipulation of the rules.


Ordinarily, where an asset is the subject of a lease, both the lessor and the lessee will be eligible to claim SBAs in respect of qualifying expenditure that they themselves incur on construction works as long as each is using the asset for a qualifying activity (e.g. property investment business for the lessor). SBAs will be linked to the person’s particular interest in the structure or building.

What next?

The Government is to include powers to introduce the SBA in Finance Bill 2018-2019. The statutory instrument for the SBA will be made after Royal Assent of Finance Bill 2018-2019. The government is to publish a draft of the proposed secondary legislation on the SBA and will consult on it over the winter, ahead of this being laid before Parliament after Royal Assent is granted to the Finance Bill.

Want to find out more, call us on 0843 005 9711.

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