Glossary · UK
What is Structures and Buildings Allowance (SBA)?
A capital allowance giving businesses tax relief at 3% per year on a straight-line basis for the cost of constructing or renovating non-residential structures and buildings, covering costs not eligible for other capital allowances.
Full Definition
The Structures and Buildings Allowance (SBA), introduced for expenditure incurred on or after 29 October 2018, gives businesses tax relief on the cost of constructing, renovating, or converting non-residential structures and buildings, at a flat rate of 3% per year on a straight-line basis (meaning the same percentage of the original cost is deducted each year, rather than a reducing balance as with plant and machinery allowances), over a 33 and one-third year period until the full cost has been relieved. It was introduced specifically to fill a long-standing gap in the UK's capital allowances system, since the cost of the structure or building shell itself (as opposed to plant and machinery within it, which already qualified for other allowances) had previously received no capital allowances relief at all. SBA is available for a wide range of non-residential buildings and structures used in a qualifying business, including offices, warehouses, factories, retail premises, hotels, and agricultural buildings, but is specifically not available for any part of a building used as a dwelling, nor for land itself (only the cost of the structure), nor for buildings that also qualify, in relation to the same expenditure, for other capital allowances such as the Annual Investment Allowance on integral plant and machinery fixtures. A business claiming SBA must keep an "allowance statement" recording key details of the qualifying expenditure, since a new owner buying the building later can generally continue claiming the remainder of the original 33 and one-third year allowance period, provided this statement is passed on. Because SBA is given on a straight-line basis without any accelerated first-year element (unlike the Annual Investment Allowance), and disposal of a building on which SBA has been claimed can trigger a balancing adjustment affecting the Capital Gains Tax calculation on sale (since allowances claimed reduce the base cost for CGT purposes), businesses undertaking significant construction or property refurbishment projects should factor SBA into both their ongoing tax planning and any eventual disposal calculations, and should keep detailed records of qualifying construction costs from the outset, since retrospective claims without adequate supporting evidence can be difficult to substantiate to HMRC.