A draft legislation has been published by the government for the new structures and buildings allowance (SBA). While earlier announcements are confirmed, there are one or two surprises. How much tax relief can you expect?

Who can claim?

Most companies and unincorporated business will be entitled to claim the structures and buildings allowance (SBA) where they incur qualifying expenditure on commercial buildings and other structures used for their trade, profession or vocation. Expenditure on buildings and structures overseas can be claimed for where the business pays tax in the UK. If you own an ‘ordinary’ UK or overseas property business, ie letting property other than residential, SBA can also be claimed.

Starting date

Only expenditure incurred on or after 29 October 2018 qualifies. You won’t be entitled to SBA if the contract for construction work was signed earlier. This means that it doesn’t matter that the construction was started or payment was made on or after the 29 October. Tip. Contracts for preparatory work, for example, planning and designing, which are signed before 29 October 2018, won’t stop you from being entitled to the SBA as long as the construction contract is on or after the date.

How much relief?

In the same way as general expenses, SBA is allowed as a deduction from taxable business income. It’s calculated as 2% of the qualifying expenditure. This means that it would take 50 years before you get tax relief for the full cost of a structure. Tip. You can start claiming the SBA in the accounting period which includes the date you begin using the structure, in your business.

Qualifying expenditure

There’s no list of what structures. qualify for the SBA. Instead, the rules interact with those for capital allowances (CAs) which exclude relief for buildings or structures. As a rule of thumb, this means that expenditure on construction which you can’t claim as a general expense against income or as a CA will qualify for the SBA. Tip. The SBA can also be claimed for expenditure on conversions and renovations of existing structures etc.

Selling or demolishing

The buyer will take any remaining entitlement to the SBA if you sell a structure. If you demolish a structure before all SBA has been claimed, you can deduct the remainder when working out whether you’ve made a capital gain or loss.

Example. Ltd spent £100,000 in 2019 on a structure qualifying for the SBA. In 2030 a fire destroys the structure. The insurance company pays Ltd £180,000 meaning it’s made a capital gain of £80,000. Ltd had claimed the SBA for eleven years, ie £22,000. It can therefore deduct £78,000 from the capital gain leaving a chargeable amount of £2,000.


There are special rules for structures subject to a lease. Broadly, where the term of the lease is not more than 35 years, all the allowances can only be claimed by the lessor. For longer leases the lessee can claim the SBA on qualifying expenditure.