(For full details of the SBA see HMRCs technical note dated 29th October 2018 available here)  Please also note there has been additional consultation on these new allowances and the final legislation will not be in place until the Summer of 2019. Therefore the information given below is only indicative and not final.


The Budget of 2018 announced the government will introduce a new Structures and Buildings Allowance (SBA) for new non-residential structures and buildings. This relief will be provided on eligible construction expenditure incurred on or after 29th October 2018 at an annual rate of 2% on a straight line basis.

The SBA is designed to provide capital allowances for structures and buildings. This is seen as being a positive step because, although capital allowances are available for “plant and machinery” in buildings the more general construction costs were not eligible for tax relief.   

The SBA is intended to stimulate investment in structures and buildings that are intended for commercial activity. Neither land or dwellings will be eligible for relief, The relief will be provided on the original costs of construction and renovation across a fixed 50 year period, regardless of ownership change.

SBA – Key Features

The following provides details of the key features of the new SBA:-

  1. relief will be given at a flat rate of two percent over a 50 year period
  2. relief will be available for new commercial structures and buildings, including costs for new conversions or renovations
  3. relief is available for UK and overseas structures and buildings, where the business is within the charge to UK tax
  4. relief will be limited to the costs of physically constructing the structure or building, including costs of demolition or land alterations necessary for construction, and direct costs required to bring the asset into existence
  5. relief is available for eligible expenditure incurred where the contracts for the physical construction works were entered into on or after 29th October 2018
  6. claims can only be made from when the structure or building comes into first use
  7. land costs or rights over land will not be eligible for relief, nor will the costs of obtaining planning permission
  8. the claimant must have an interest in the land on which the or building is constructed
  9. dwelling houses will not qualify, nor any part of a building used as a dwelling where the remainder of the building is commercial
  10. sale of the asset will not result in a balancing adjustment – instead the purchaser takes over the remainder of the allowances written down over the remaining part of the 50 year period
  11. expenditure on integral features and fittings of a structure or building that are currently available as expenditure plant and machinery will continue to qualify for writings down allowances (WDAs). This includes the Annual Investment Allowance (AIA)
  12. SBA expenditure will not qualify for AIA
  13. where a structure or building is renovated or converted so that it becomes a qualifying asset, the expenditure will qualify for a separate two percent relief over the next 50 years.


Plumstone Hotels Ltd build a new extension to an existing hotel at a cost of £1m. All the work is completed in their tax year which runs from 1st April 2019 to 31st March 2020.

An expert analysis of the the expenditure provides the following information:-

Plant & Machinery “Fixtures” (heating, electrics, sanitary ware etc, etc) £320,000. Balance of expenditure to SBAs equals £680,000

Therefore in the tax year when the work was completed the total allowances claimable would be the £320,000 for the P&M Fixtures (covered by the maximum £1m of Annual Investment Allowance) plus £13,600 of SBAs (i.e. £680,000 x 2%)

The above goes to illustrate the importance of making sure that the P&M “Fixtures” are claimed as priority as this will accelerate the tax relief to the business. This is because SBAs do not qualify for the Annual Investment Allowance and therefore any potential tax relief, although always welcome, will be received over a longer time period.


The Government are including powers to introduce the SBA in the Finance Bill 2018-2019. Therefore the statutory instrument for the SBA will be made after Royal Assent of the Finance Bill 2018-2019.

We welcome any additional tax incentive provided for our clients. However, we do question, given the rate at which this tax relief will be realised, if it will actually stimulate the market to any great extent. To us it highlights the priority is to claim capital allowances on “plant & machinery fixtures” where the tax relief can be realised more quickly through the application of the the Writing Down Allowances and the Annual Investment Allowance. This is especially true as the Annual Investment Allowance is being raised to £1m as from the 1st January 2019 for a period of two years.