Is this a new capital allowance to celebrate? 

A fanfare accompanied the announcement on 29th October 2018 of a new capital allowance on expenditure on commercial building and structures.

Although the final legislation is pending, we know that the new Structures and Buildings Allowance (SBA) will give a 2% per year deduction on qualifying building costs – so relief is given over a 50 year period.

  • If the property is sold, the new owner picks up the balance from the old owner
  • If the property is sold at a gain, the SBAs claimed are clawed back. So, in those circumstances, it really only provides a timing difference benefit.  (This treatment is different to other capital allowances, which provide an absolute benefit.)
  • There will also be a requirement to keep quite onerous records in relation to SBA qualifying projects, including the date of the earliest contract of construction, the date of first use and more.

Those taxpayers who might benefit from SBA in a tax return which is currently being prepared (e.g. 31 December 2018 year ends), will have to wait until the legislation is final.

In the meantime, we will be monitoring the situation to ensure our clients maximise claims for relief.