How to claim the new Structures and Buildings Allowance

the words tax allowance are spelled out using plastic letters on a brown desk

HMRC has recently issued new guidance on the Structures and Buildings Allowance (SBA) and how to make a claim.  This is a new tax relief that will be available to business who spent money on or after 29th October 2018 on improving their business premises.

 

How much is the tax relief?

You may be able to claim a 2% tax relief a year, on certain money you spend. This allowance could potentially last up to 50 years.

You must have paid some or all the costs towards the purchase, construction or renovation of the structure.

All construction contracts must have been signed on or after 29 October 2018 and the structure must:

  • have not been used as a residence the first time it was used or during the period you’re claiming for
  • be used for a qualifying activity
  • have an allowance statement

If you claim this allowance and the structure is sold or demolished, you may have to pay more Capital Gains Tax or Corporation Tax than usual. You should always check if claiming the structure and buildings allowance is right for you.
 

What can you use the structure for?

The structure must be used for a qualifying activity, which is taxable in the UK.

Qualifying activities are:

  • any trades, professions and vocations
  • a UK or overseas property business (except for residential and furnished holiday lettings)
  • managing the investments of a company
  • mining, quarrying, fishing and other land-based trades such as running railways and toll roads

 

How to make a claim

You must claim using the capital allowances section on your tax return – get more information on how to do this on the gov.uk website here.

You will also need an allowance statement for the structure. If you’re the first person to use the structure, you must create a written allowance statement before you can make a claim.

Your allowance statement must include:

  • information to identify the structure, such as address and description
  • the date of the earliest written contract for construction
  • the total qualifying costs
  • the date that you started using the structure for a non-residential activity

 

Guidance on SBA

You can get more detailed guidance on SBA on the gov.uk website here.

 

Further information

If you found this information useful, you may also want to check out the following:

 

MRA help individuals, businesses and families achieve the best quality of life they can with the resources they have. MRA specialise in corporate solutions, cash-flow analysis, life centred planning and much more.

Business Consultants based in East Sussex we service clients across the South East, Sussex and Kent, including smaller towns such as Ashford, Battle, Bexhill, Bodiam, Brighton & Hove, Cranbrook, Crowborough, Eastbourne, Hailsham, Hastings, Heathfield, Herstmonceux, Lewes, Mayfield, Newhaven, Rye, Seaford, Sevenoaks, Tenterden, Tonbridge and Tunbridge Wells.

 

Sources:

https://www.gov.uk/guidance/claiming-capital-allowances-for-structures-and-buildings

https://www.gov.uk/capital-allowances/how-to-claim