Capital Allowances

Claiming Capital Allowances for Structures and Buildings

In 2018, the UK Government introduced the Structures and Buildings Allowance (“SBA”) in respect of new expenditure incurred by businesses on non-residential buildings and structures. This relief provides tax deductions for expenditure incurred on certain assets that would not previously have qualified for capital allowances, potentially reducing the cost of investment and carrying on business in the UK.

The purpose of the this legislation is to stimulate investment in the construction, development and improvement of commercial buildings and structures.

Structures and Buildings Allowances are available for qualifying expenditure incurred on the construction of new, and the enhancement of existing, commercial buildings and structures. This relief may be available in respect of both UK and overseas properties, where the businesses incurring the expenditure are within the charge to UK tax. Note this relief is not available for expenditure incurred on buildings which are in ‘residential use’.

Relief is available on a straight-line basis currently at 3% per annum, i.e. over 33⅓ years.

Qualifying SBA Expenditure

Qualifying expenditure can include amounts incurred on structures and buildings, as well as incidental expenditure (such as demolition works and/or land alterations to facilitate construction). No relief is available in respect of expenditure incurred on land, other than the alteration of the land for the installation of a building or structure.

Qualifying expenditures does not include expenditure that would qualify for plant and machinery allowances (“PMA”). In order to benefit from the SBA, businesses must therefore undertake a capital allowances analysis to segregate expenditure relating to the provision of structures and buildings from expenditure on the provision of plant and machinery. Businesses can continue to claim PMAs in respect of qualifying expenditure incurred on the provision of plant and machinery, at the higher rates of annual relief.

Relevant Interest
In order to claim the SBA, the taxpayer needs to hold a ‘relevant interest’ in the buildings or structures in respect of which expenditure has been incurred. The definition for these purposes derives from what constitutes an interest in land under property law, which includes a freehold title and a lease (and, typically, an agreement to lease) but not a mere licence (unless such licence amounts to a lease in substance).
Annual Relief

From April 2020, SBAs are available on a straight-line basis over 33⅓ years (i.e. 3% per annum). Unlike with PMAs, in the event that SBAs are not claimed in respect of a period, the allowances will not be available to be carried forward to a later period, and the benefit will be lost.

For any subsequent capital projects, the availability of SBAs will need to be separately considered. If applicable, SBAs will be available on a straight-line basis over 33⅓ years from the date the new additions are brought into use (with the first year’s allowance time apportioned from this date). Once brought into use, even if subsequently the building or structure is temporarily not in use, SBAs will continue to be available as long as the claimant continues to hold the relevant interest.

For properties that are demolished in their entirety, SBAs will no longer be available and the balance of unclaimed SBAs will be lost. SBAs claimed up to the point of demolition will be treated as deemed consideration in the Chargeable Gains computation.

SBA expenditure does not qualify for the Annual Investment Allowance (AIA), which is only available for expenditure incurred on the provision of plant and machinery.


For SBAs to be available, all contracts for the physical construction must be entered into on or after 29 October 2018. This may extend to demolition or enabling works contracts in preparation for the construction of the particular building or structure.

For projects where internal employees carry out the construction works (and there may, therefore, not be a specific contract in place), SBAs are available where such works commence on or after 29 October 2018.


As with PMAs, there is scope for a lessee to claim SBAs in respect of a property it leases, to the extent the lessee incurs its own qualifying SBA expenditure, e.g. as part of a tenant fit-out. The lessee can claim SBAs during the term of its lease.

On the expiry of the lease, SBAs will no longer be available but the balance of unclaimed SBAs will effectively be allowed as a capital loss for the lessee (which can be offset against other capital gains within the company/group).


On the sale of a property in respect of which SBAs are applicable, any SBAs claimed during the vendor’s period of ownership will be treated as additional consideration in the Chargeable Gains computation. This differs from the existing provisions relating to plant and machinery, whereby PMAs cannot create or increase a capital loss but do not impact a capital gain (which remain unchanged).

The vendor will need to provide an ‘allowance statement’ to the purchaser, setting out:

  • The date of the earliest contract for the construction of the building or structure;
  • The amount of qualifying SBA expenditure incurred; and
  • The date it was first brought into use.

Provided this allowance statement is obtained, the purchaser will inherit the residual SBA pool, which will be written down over the remainder of the 33⅓ year period. This is the case even where the vendor is an entity not within the charge to UK tax, as the 33⅓ year period begins from the date of first use, regardless of whether SBAs have/could have been claimed.

In addition, the grant of a long lease (for a term of more than 35 years and conferring at least 75% of the market value of the property) is treated as the lessee acquiring the relevant interest and transferring entitlement to claim SBAs from the lessor.

In the event that a newly built property is acquired from a developer, the new owner may be able to claim SBAs based on the part of their own purchase consideration which relates to the acquisition of the building or structure.

Claim Capital Allowances for Structures & Buildings

Discover the untapped potential in your property investments with our expert guidance on Structures and Building Capital Allowances. At Acute Business Advisory, we are committed to maximising your financial benefits by identifying and claiming these valuable allowances on your behalf. We invite you to book a complimentary consultation with our seasoned tax specialists, who are adept in UK tax legislation and dedicated to optimising your asset returns. This no-obligation session is your first step towards unlocking significant tax savings and enhancing the profitability of your property portfolio.

Contact us today to secure your free consultation and take a strategic leap forward in your fiscal management.


Working with Acute Business Advisory

Consultative Approach

At Acute Business Advisory, we take a highly consultative approach when working with our clients. We believe that the best outcomes are achieved through a collaborative and tailored approach, which is why we invest the time to understand our clients' unique needs, goals and challenges. Our advisors work closely with clients to gain a deep understanding of their business, and then provide customised, actionable recommendations based on that understanding. Our goal is to not only provide expert advice, but also to empower clients with the knowledge and tools they need to make informed decisions and drive business growth. Our consultative approach is designed to ensure that our clients feel heard, understood, and supported every step of the way. If you're looking for a partner who truly cares about your success, Acute Business Advisory is here to help.

Team of Experts

At Acute Business Advisory, we are proud to have a team of experts with a wealth of experience and knowledge. Our advisors come from diverse backgrounds and bring a wealth of expertise to the table, allowing us to provide tailored, comprehensive advice to our clients. Whether you need support in finance, require advice on your exit options or want to explore tax efficient trusts, we have an expert on our team who can help. Our advisors stay current on the latest industry trends and best practices, ensuring that our clients always receive the most up-to-date, relevant advice. We are committed to providing our clients with the highest level of service, and our team of experts is at the forefront of this effort. With Acute Business Advisory, you can trust that you're working with a team of experts who are dedicated to your success.

Network of Professionals

Acute Business Advisory has a robust network of professionals that we leverage to support our clients in many different ways. Not only do we host networking events to bring our clients and industry leaders together, but we also tap into our network to provide our clients with access to a wide range of specialised services. This enables us to offer a one-stop-shop solution for all of our clients' needs, no matter how complex or niche. Our network is made up of trusted professionals who share our commitment to delivering high-quality, personalised service. By working with our network, we can provide our clients with the support and resources they need to achieve their goals, whether that means connecting them with new partners, finding specialised services, or providing access to capital. With Acute Business Advisory, you can trust that you're part of a wider community of professionals who are dedicated to your success.


Register Your Interest Today

We'll be in touch to explore how we can help you and your business. 

We take a consultative approach and if we can't help you directly we're confident we will know someone that can. 

We look forward to hearing from you.