CA94650 - Structures and buildings allowance (SBA): evidence requirement: the allowance statement
CAA01/S270IA(4)
An ‘allowance statement’ means a written statement, which must include the following information:
- information to identify the building to which it relates
- the date of the earliest written contract for the construction of the building
- the amount of qualifying expenditure incurred on its construction or purchase
- the date the building is first brought into non-residential use.
When the relevant interest in a building is acquired, the seller must pass the allowance statement (or a copy of) to the purchaser, so that the purchaser can claim SBA.
There is no requirement to record the amount of SBA claimed. Any unclaimed SBA cannot be carried forward and is lost, so it is assumed the full amount of SBA available in any period has been claimed.
Where capital improvement or renovation costs are incurred on a building that already qualifies for SBA and an allowance statement for the building exists, for administrative ease, a taxpayer can add subsequent qualifying construction costs to the existing allowance statement. Where all or part of a building is sold, the relevant parts of expenditure must be clearly identified on the allowance statement.
There are additional requirements for the allowance statement if the enhanced rate of SBA is being claimed for special tax site qualifying expenditure CA94750.
There is no requirement to routinely disclose the allowance statement to HMRC. It should be retained as part of business records that may be required to be produced during a check by HMRC into any claim.
Example
Jenny constructs a retail outlet incurring qualifying construction costs of £700,000. The date of the first written contract for construction is 1 January 2020, which she documents on her allowance statement. Jenny rents out the retail outlet to Bob, who incurs costs of £17,000 for capital fit-out works on 1 March 2021. The terms of the let to Bob satisfy the conditions in CAA01/S270DD CA90600 such that Bob is entitled to claim SBA on both the original and fit-out construction costs. Note, however, that the 33 1/3 year claim period is different for each instance of expenditure. When Bob vacates the premises and the fit-out works are demolished, it will be easy to identify which of the qualifying costs relate to those fit out works as they will be either identified separately on a single allowance statement, or will have a separate allowance statement from the statement for Jenny’s original construction costs.
There is no prescribed form for the allowance statement, but here is an example of the information it must contain:
| Jenny | Bob | |
|---|---|---|
| Building or structure | Unit X (Address) | Fit-out at Unit X (Address) |
| Date of first construction contract | 1 January 2020 | 1 March 2021 |
| Total amount of qualifying expenditure | £700,000 | £17,000 |
| Date the building came into use | 1 March 2021 | 1 March 2021 |
Qualifying expenditure incurred by a person not chargeable to UK tax
There may be situations where the person incurring construction expenditure on a building is not within the charge to UK tax and therefore cannot make a claim for SBA. Examples include Government bodies, the Crown and non-UK tax resident persons with no UK income.
In these circumstances, that person will still need to create an allowance statement, to include all the information outlined above, in order to provide the statement to any subsequent purchaser who is within the charge to UK tax and is entitled to claim SBA CA94700.
Where there is no allowance statement, the qualifying expenditure is nil.