CA93010 - Structures and buildings allowance (SBA): qualifying expenditure: meaning of qualifying expenditure

CAA01/S270AA(1)(c), S270BA

For SBA to be available qualifying expenditure must have been incurred on a building. The allowance is a fixed percentage per year of that qualifying expenditure CA91300.  

To qualify for SBA the first use of the building must be non-residential CA92400.  If the first use of a building is residential use, the qualifying expenditure is nil.

At the point of first use of the building it will be possible to determine the amount of qualifying expenditure.  This is because qualifying expenditure means expenditure that is ‘qualifying capital expenditure’ and that is not specifically excluded. 

The amount of qualifying capital expenditure will depend upon whether the person who first uses the building constructed it themselves, or they acquired it unused from a developer CA93600.  That amount is determined either directly from expenditure incurred on the construction of a building, or by comparing those costs with the sum paid for the relevant interest in the building.

In order to establish qualifying expenditure:

  1. Determine the ‘qualifying capital expenditure’ incurred on the construction or acquisition of the building, as defined by CAA01/S270BB-270BE CA93400
  2. Subtract amounts qualifying for other capital allowances (such as P&M) CA94300
  3. Subtract any amounts specifically disallowed by CAA01/S270BG-BI CA94000.

In computing the amount of qualifying expenditure, if an apportionment is required it is to be done on a just and reasonable basis CA94010.

The qualifying expenditure does not change, even when the ownership of the building changes. The main exceptions are where additional VAT liabilities CA94570 and rebates CA94580 arise.

Qualifying expenditure is treated as nil if the person making the claim does not satisfy the evidence requirements CA94600. 

Costs in excess of market value are also excluded CA94100.

There is guidance on the meaning of special tax site qualifying expenditure for the costs of constructing or acquiring new buildings in special tax sites at CA94750.