How to claim the new Structures and Buildings Allowance

September 26th 2019

HMRC has recently published new guidance on the Structures and Buildings Allowance (SBA) following changes to the rules. This includes important information about how to claim it. What’s involved? John Craig discusses below.

The 2018 Budget announced that businesses would be entitled to a new tax relief, the Structures and Buildings Allowance (SBA) would apply where they spent money on or after 29th October 2018 on buying or improving their business premises. However, there was uncertainty over some aspects of the SBA, but the good news is that HMRC has now clarified the position by publishing new guidance, including most importantly, how to claim it.

How much tax relief?
One thing that hasn’t changed from the original proposal is the amount of deduction your business can claim, which is 2% per year of the costs you incur. In its latest guidance HMRC has set out the requirements for claiming it.

Making a claim
Like other types of capital expenditure, e.g. the cost of machinery, the SBA must be claimed in the capital allowances section of your tax return or, if you run your business though a company, its return. If you have already submitted a tax return for the period in which you incurred costs which qualify for the SBA, you can make an amendment within the time allowed. Unlike other capital allowances, relief will be lost if it is not claimed because it will not be possible to carry forward relief to a later period.

Record keeping requirement
As part of the SBA claim process you create an allowance statement. Although it doesn’t need to be provided to HMRC unless requested, it must include:

1. Details that identify the structure, e.g. address and description.
2. The date of the written contract for construction.
3. The expenditure qualifying for the SBA.
4. The date that you started using the structure for your business.

The allowance statement is important because the claim period is up to 50 years and if ownership changes the buyer can only claim the SBA if they have a copy of the statement.

The SBA must be claimed on the tax return for the business. You must create and maintain an allowance statement containing key information about the property and qualifying expenditure.

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