Structure and Buildings Allowance

Prior to the 2018 Budget, there was a call for a change in legislation to be introduced due to previous allowances (such as the industrial buildings allowance) being withdrawn and leaving no available reliefs on construction expenditure whilst the building is in use. 

With businesses looking to rebuild after the pandemic and multiple opportunities arising, now may be the time to take that next step and potentially own the next premises your business moves into, particularly so when considering the grants that are available. 

This SBA may last the whole of the allowance period. You must have paid some or all the costs towards the purchase, construction, or renovation of the structure. All construction contracts must have been signed on or after 29 October 2018 and the structure must: 

• Be non-residential  

• Be used for a qualifying activity

• Have an allowance statement.

If you claim this allowance and the structure is sold or demolished, you may have to pay more Capital Gains Tax or Corporation Tax than usual. You should check if claiming the structures and buildings allowance is right for you.

Qualifying activity

• any trades, professions and vocations

• a UK or overseas property business (except for residential and furnished holiday lettings)

• managing the investments of a company

• mining, quarrying, fishing and other land-based trades such as running railways and toll roads.

Allowance statement

• information to identify the structure, such as address and description

• the date of the earliest written contract for construction

• the total qualifying costs

• the date that you started using the structure for a non-residential activity.

If you buy a used structure, you can only claim the allowance if you get a copy of the allowance statement from a previous owner. For any extensions or renovations that were completed after you started using the structure, you can record separate construction costs on the allowance statement or create a new allowance statement. You’ll need to keep information about the earliest construction contracts in your records. You can use things like formal contracts, emails or board meeting notes.

HMRC have also clearly laid out items that cannot be claimed for, for further information please refer to the HMRC guidance.

Further to the above, there are instances where you cannot claim, need to separate a claim or lease the building. Please do not hesitate to contact us to find out more.

Contact our Construction and Property team today

If you have any questions about this article or would like advice about your business, get in contact with our team today.