Structure and buildings allowance was introduced by HMRC for expenditure on construction of non-residential structures and buildings.

This relief is only available for expenditure incurred after the 29th of October 2018.

THE TAX RELIEF FROM STRUCTURE AND BUILDINGS ALLOWANCE

The relief that is given is a 2% straight-line allowance over a period of the expenditure on maturity over a period of 50 years.

TYPE OF STRUCTURES THAT QUALIFY FOR STRUCTURE AND BUILDINGS CAPITAL ALLOWANCE.

  • The structures and buildings allowance is only available for non-dwelling structures or commercial buildings.
  • It is also available for commercial buildings whether in the UK or abroad.
  • It can be claimed for qualifying works on buildings or structures. Such works as new builds, alterations, an extension of buildings, refurbishments and renovations.
  • This allowance can be claimed by both companies under corporation tax and sole traders /partnership etc. under income tax.
  • It is not available for the cost of the Land.

  • To be able to claim these relief qualifying activities must be carried on the building. Activities such as trade, ordinary property business, ordinary overseas property and profession or vocation.
  • Expenditure on mixed development must be apportioned and the relief will only be given to the non-residential part of the expenditure.

CONDITIONS FOR MAKING A CLAIM FOR STRUCTURE AND BUILDINGS CAPITAL ALLOWANCE.

  1. The claim for this relief must be made in the year the asset was first brought into use.
  2. The taxpayer must hold interest in the land that the building or structure sits on. The interest must be held by the person that spent the money on the structure. It is possible for the property to have different relevant interest owners.
  3. When the owner of the building sells the property, there are no balancing events or adjustment such as the case of normal capital allowance claim. The new owners will just inherit the written down the value from the seller.
  4. To enjoy this relief the claimant must provide an allowance statement to HMRC for every claim made.

ALLOWANCE STATEMENT FOR STRUCTURE AND BUILDINGS CAPITAL ALLOWANCE.

The allowance statement must be provided to the revenue before this claim can be enjoyed.

It will serve as evidence and entitlement to the claim.

For every claim for structural building allowance, an allowance statement must be made.

Even when an extension to a building has been made, a new allowance statement must be made.

Whenever the allowance statement requirement is not met the expenditure will be deemed nil and this relief was taken away.

However, because the HMRC understands that this could be very hard to do in practice, they have said that the claim may adjust the first allowance statement submitted when the building was first built.

Without the allowance statement, there can’t be a claim to structures and buildings allowance.

INFORMATION REQUIRED IN THE ALLOWANCE STATEMENT.

The statement will contain information such as
  • The start date when the asset was first brought into use
  • The activity that would be carried out in the building
  • The actual expenditure for the building, it must be noted that estimates are not permitted.

When the building is sold, the seller must provide a written allowance statement to the new buyer which will state the date of the earliest contract for the building, the amount of qualifying expenditure incurred on its construction and the date that the asset was first brought into use.

CONCLUSION ON STRUCTURE AND BUILDINGS ALLOWANCE

This relief can be claimed for a period of 50 years, therefore claimant must ensure it is made properly so as to ensure that future owners can also enjoy this relief.

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