The Chancellor announced at Budget 2018 that the government will introduce a new Structures and Buildings Allowance (SBA) for new non-residential structures and buildings.
This SBA directly addresses a gap in the current capital allowances system, where no relief has been available for most structures and buildings, although capital allowances are available for plant and machinery that forms integral features of buildings.
The new SBA gives a flat rate 2% allowance for the cost of buildings other than residential buildings (shops, offices, factories, warehouses, hotels, care homes etc). Expenditure on land, planning costs and parts of a structure which can qualify as plant and machinery (and thus attract Annual Investment Allowance and Writing Down Allowance) will not qualify for this new SBA.
There will be no claw back of allowances if the building is sold, and the new owner will inherit the flat rate 2% allowance based on original cost.
Planning point: The new Structure and Buildings Allowance applies to building works where the contract is entered into on or after 29th October 2018. It is important to be aware of this new relief if you are buying a commercial property to ensure that sufficient enquiries are made in relation to this.
Planning point: Many owners of commercial property are not aware of the hidden tax allowances available to them in terms of the plant and machinery which is part of the building (e.g. electrical systems, plumbing systems etc). We can arrange a free review with our specialist partners to identify whether you have the potential to claim tax relief on your existing and new commercial buildings which could be worth many thousands of pounds.
If you like to discuss your own commercial buildings and the possible tax benefits available to you, then please contact Alan Sowden, our Technical Director, on 01865 379272