CA94580 - Structures and buildings allowance (SBA): additional VAT: additional VAT rebates

CAA01/S270GC

A person who has the relevant interest and first makes use of a building may receive an additional VAT rebate in respect of his qualifying expenditure.

The person must reduce the original qualifying expenditure incurred on the building by the amount of the VAT rebate at the beginning of the chargeable period during which the rebate accrues. The amount of SBA given from the chargeable period in which the rebate accrues onwards will be computed on that reduced qualifying expenditure.

SBA already given in earlier chargeable periods is not revisited, but the total amount of SBA given is limited to the reduced qualifying expenditure and that limit will be reached in less than 33 1/3 years after the building is first brought into use.

Example

Bob constructs a workshop for £250,000 plus £50,000 VAT. He brings it into use immediately and claims SBA. He is restricted to recovery of 50% of the VAT he is charged so the SBA qualifying expenditure is £250,000 + £25,000 = £275,000. The annual SBA is £275,000 × 3% = £8,250. In year six he changes the use of the workshop and accrues an additional VAT rebate of £2,500. His SBA qualifying expenditure then becomes £275,000 - £2,500 = £272,500 and the SBA given for this and future chargeable periods is £272,500 × 3% = £8,175. After 33 years the total SBA given will be (£8,250 × 5) + (£8,175 × 28) = £270,150 and the maximum SBA claimable in the chargeable period in which the 33 1/3 year allowance period ends will be £272,500 - £270,150 = £2,350.