CA91300 - Structures and buildings allowance (SBA): allowances: amount of allowance

CAA01/S270AA(5)

As with other capital allowances, the SBA is given for a chargeable period. 

The basic rule is that, for a chargeable period of one year, the allowance is 3% of the qualifying expenditure.  This is calculated on a straight line basis, which means that qualifying expenditure may be relieved in full over 33 1/3 years.

For a chargeable period of one year an enhanced rate of SBA of 10% over 10 years is available for special tax site qualifying expenditure CA94750.

Whether a person constructed a qualifying building or bought it unused, the annual rate of allowance is 3%. The SBA is available to be claimed on a straight line basis over 33 1/3 years CA90100 from the date of the building’s first non-residential use CA92500.

The amount of the allowance is reduced if the building was brought into qualifying use part way through a year CA91400.  For example, if the claimant’s year end is 31 December and the building was brought into qualifying use on 1 July, the allowance will be proportionally reduced to six-twelfths of the allowance available for a full twelve months.

Example of commencement of use and subsequent sale

Tom’s period of account runs from 1 January to 31 December. Tom constructs a building costing £1 million which is brought into qualifying use on 1 April. For the chargeable period during which the building is brought into use, Tom can claim £1 million × 3% × (9 ÷ 12) = £22,500. For subsequent years, Tom will be able to claim £1 million × 3% = £30,000 per year.

If Tom sells the building to Veronica, Veronica can claim the SBA on the original construction costs, at the same rate of 3% per year, which is £30,000 per year for the remainder of the 33 1/3 year period. The purchase price Veronica pays does not change the amount of the SBA available.

See CA11510 for more information on chargeable periods.