The Capital Allowances (Structures and Buildings Allowances - SBAs) Regulations 2019 has finally come into force – Yes!

The question is, how will the allowance be applied and who will benefit?


SBA’s only apply to ‘new’ commercial buildings (i.e. non-residential), where all of the expenditure incurred on a project is contracted after 29th October 2018

Anything prior to this date means the project’s costs will not qualify, for example, projects which span the qualifying date will negate the ability to claim SBAs.

It’s a slow burner, with the Annual Investment Allowance not applicable, and at a flat rate of only 2% per annum over 50 years, but it does bring the UK more into line with other countries around the World.

Future purchasers will also be able to inherit the balance of unclaimed allowances, subject to complying with the written evidence requirement.

Types of Buildings

Non-residential buildings will attract SBA’s, providing they’re used for a ‘qualifying activity’ and taxable in the UK.

So, all non-residential buildings are likely to benefit, including; contracts for new build, refurbishment, alteration and extension works, even lessees incurring fit-out expenditure can claim.

The relief will not apply to furnished holiday lettings and student accommodation. In mixed use buildings, the SBA must be apportioned to omit the proportion of residential use.

Qualifying Costs

On all forms of construction work, the SBA is for the provision of the building only. It must exclude land and the cost of altering land, and any land remediation or landscaping, and acquisition fees and associated taxes.

It will also be necessary to still ascertain the full value any plant and machinery allowances (PMA) on fixtures as these must be excluded from the SBA calculation. This means PMA’s must still be identified and valued in the usual way, before calculating the SBA on the balance of expenditure, less non-qualifying items, of course.

Only certain on-costs and project design fees are allowable in the SBA. This means the computation of the SBA’s on-costs may actually be slightly different to the on-costs applicable when arriving at a PMA claim. 

Items you cannot claim for:

  • Residential property including student accommodation and FHL’s;
  • The plant and machinery elements in the building on fixtures which must be valued separately;
  • Costs used to claim for other allowances;
  • Planning fees, loans, legal expenses financing etc;
  • Landscaping or land remediation;
  • Costs received from third parties by way of grants and contributions, (they must be netted off).



SBA allowances can be passed to future owners, but the first claimant of the SBA must produce an ‘allowance statement’ in accordance with the legislation’s guidelines to ensure the ongoing entitlement to future buyers. 

The Capital Allowances due diligence checklist and the CPSE questions relating to property purchases and the availability of Capital Allowances must therefore be extended, and appropriate warranties drafted to ensure the right documents are obtained from the sellers at the right time.  

Acquiring property direct from a developer after 29th October 2018:

If the building is new/unused, the basis for SBA is the price paid, less ‘items you cannot claim’. If the building is already used, then the SBA is based on the developer’s construction cost.

Purchases from non-developers:

If the building is unused, the SBA is based on ‘the lower of the price paid for the structure or original construction cost’. This suggests in a purchase scenario for a single purchase sum that it may be required to be broken down to exclude items that can’t be included; such as, land and fees, but this may require further clarification.

If the building is purchased as used, then the SBA will be inherited via a written value statement produced by the seller, but beware: no written statement, no allowances.

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