CA91900 - Structures and buildings allowance (SBA): allowances: multiple uses

CAA01/S270EB

Entitlement to SBA is in relation to a qualifying activity CA91100.

A building that qualifies for SBA CA90100 may be put to multiple uses, some of which do not entitle the holder of the relevant interest to the SBA for some or all of a particular chargeable period.

Where more than one activity is carried on in the building, any SBA for the building must be based on an apportionment of the SBA-qualifying expenditure to each activity, as outlined below.

A building is put to multiple uses in the following situations:

1. Where the building is used for two or more qualifying activities

The whole or part of a building might be simultaneously used for different activities, for example a freeholder might carry on a mixture of trade and property business activities within one building. Each activity might qualify but only for a part of the qualifying expenditure on the building or part-building.

2. Where part of the building is used for a qualifying activity and another part is used for another activity

A warehouse may be split so half is used for a trade and the other is used for recreational use, such as a hobby of the freeholder. The part used for the trade will qualify, but the part used for the non-qualifying recreational activity will not.

3. Where part of the building is used both for the purposes of a qualifying activity and for the purposes of another activity

This may include cases where:

  • there are communal areas, such as entrance halls, corridors, lifts or stairways, used for the purposes of different activities carried on in separate parts of a building; for example, in a multi-use block containing residential flats and commercial units such as retail or offices
  • multiple activities are carried on within the same space within a building.

Just and reasonable apportionment

In these cases the amount of qualifying expenditure on the building remains unchanged, but the SBA given to each qualifying activity for a chargeable period will be based on an ‘appropriate proportion’ of that qualifying expenditure incurred on the building.

The appropriate proportion of the qualifying expenditure is the amount of that expenditure that can, on a just and reasonable basis, be apportioned to the qualifying activity if the total expenditure was apportioned between all activities. This apportionment must take into account the extent to which each part of the building is used for each activity in the chargeable period.

The allowance given to each qualifying activity will be 3% of the appropriate proportion of the qualifying expenditure attributable to that qualifying activity.

It will be necessary to revisit the apportionment from one chargeable period to the next where the use of the building changes.

Note that if the part that is in use for a qualifying activity is within a dwelling house, no allowance is available in respect of that part CA92600. This means that the costs, for example, of an office in a home will not qualify for SBA.

See also CA92200 for guidance on insignificant use.

Example

Allie incurs £1 million qualifying expenditure buying an unused warehouse from a developer in which to set up her veterinary business. She only needs 20% of the building initially, but turns 40% of the building into a climbing wall leisure facility, and allows a charity to make use of another 20% until she needs the space. The final 20% of the building is taken up by a central area that provides the main entrance to the building and access to each of the three areas.

Allie incurs the following additional SBA-qualifying expenditure setting up the various parts of the building:

  • £200,000 on the veterinary practice part of the building
  • £100,000 on the climbing wall part of the building
  • £40,000 on the communal core area

For the purposes of this example, assume that:

  • apportioning the purchase price for the building by floor space would be just and reasonable
  • all parts of the building come into non-residential use for the first time on 6 April 2020
  • the first qualifying use takes place for the veterinary and climbing businesses on 6 April 2020
  • the respective trades start on 6 April 2020
  • accounts for each trade are made up to 5 April.

Allie’s tax return for the year ending 5 April 2021 will include the following SBA claims:

For the veterinary business, £13,800, which is 3% of the following amounts:

  • £200,000, the appropriate proportion of the qualifying expenditure to purchase the relevant interest (20% × £1 million)
  • £50,000, the appropriate proportion of the communal area (25% × 20% × £1 million)
  • £10,000, the appropriate proportion of the qualifying expenditure to set up the communal area (25% × £40k)
  • £200,000 set-up expenditure incurred on the veterinary part of the building.

For the climbing business, £18,600, which is 3% of the following amounts:

  • £400,000, the appropriate proportion of the qualifying expenditure to purchase the relevant interest (40% × £1 million)
  • £100,000, the appropriate proportion of the communal area (50% × 20% × £1 million)
  • £20k, the appropriate proportion of the qualifying expenditure to set up the communal area (50% × £40,000)
  • £100,000 set-up expenditure incurred on the climbing part of the building.

The 20% of the building in use by the charity has been brought into non-residential use, but has not been brought into qualifying use. There is no entitlement to SBA in respect of that part of the building until it is brought into qualifying use, as long as that day falls before 6 August 2053.