CA93500 - Structures and buildings allowance (SBA): qualifying expenditure: qualifying capital expenditure: qualifying capital expenditure on purchase of unused building other than from a developer

CAA01/S270BC, S270BL

Where a person acquires an unused building other than from a developer, the purchaser is treated as incurring qualifying expenditure where the following conditions are all met:

  • all the contracts for construction of the building were entered into on or after 29 October 2018
  • capital expenditure has been incurred on the construction of the building by another person
  • the purchaser incurs capital expenditure on acquiring the relevant interest in that building before it is first used
  • the relevant interest has not been sold by a developer in the course of their development trade.

The purchaser’s qualifying capital expenditure is the lesser of the following:

  • the capital sum paid by the purchaser for the relevant interest
  • the capital expenditure incurred on the construction.

If the relevant interest has been sold more than once before the building is first used, the capital sum paid by the purchaser for the relevant interest is the capital sum paid on the last of those sales.

A building is unused if it has not been used for any purpose.

The capital sum paid by the purchaser, or the capital construction expenditure, must be apportioned on a just and reasonable basis to remove excluded costs CA93550.

The purchaser’s qualifying expenditure is treated as incurred when the capital sum to acquire the relevant interest is paid.

The buyer may pay a deposit and then the balance of the purchase price on completion. In that event the buyer is treated as incurring all of the qualifying expenditure on the completion date.

Example

David incurs capital expenditure of £1 million on constructing a building. He does not bring it into use and sells it to Stephen for £1.5 million after deducting unallowable costs relating to land. Stephen’s qualifying capital expenditure is the lower of David’s construction expenditure and the price Stephen pays to David, which in this case will be £1 million.