Capital allowances for structures and buildings

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The government will introduce a new Structures and Buildings Allowance (SBA) for new non-residential structures and buildings. Relief will be provided on eligible construction costs incurred on or after 29 October 2018, at an annual rate of two percent on a straight-line basis.

Businesses that incur qualifying capital expenditure on structures or buildings used for qualifying activities will be able to claim the SBA over a 50 year period to encourage investment in the construction of new structures, buildings and the improvement of existing ones. The SBA will be allowed as a deduction from profits at an annual rate of 2%. The relief will be available to businesses that are chargeable to income tax and companies chargeable to corporation tax.

The 2% writing down allowance will be at a flat rate, calculated on the amount of original construction expenditure. There will not be a system of balancing charges or allowances on a subsequent disposal of the asset. Instead, a purchaser will continue to claim the annual allowance of 2% of the original cost. This is intended to ensure that the cost of construction and renovation will be relieved over an average life of the buildings. The amount eligible for relief will not be increased where a structure or building is purchased and has appreciated in value, as this does not represent the cost of construction.

Relief will not be available for structures or buildings where a contract for the physical construction works is entered into before 29 October 2018. For speculative building and those structures or buildings constructed 'in house', relief will not be available where the construction activity began before 29 October 2018.

Anti-avoidance rules will apply to prevent manipulation of these rules.

Further details of the new relief can be found in HMRC’s technical note Capital allowances for structures and buildings

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Added By: Sue Taylor on 01st Nov 2018 - 13:39
Number of Views: 641
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