structure and building allowance

Structures and Building Allowance At a Glance

We often get a lot of people wondering about the Structure and Building Allowance, there are common questions regarding what is this allowance used for, how to be eligible for the relevant criteria, and what is the case of dwelling properties. If you are also the one who wonders about the same queries, you are on the right page. We have got you covered by answering the frequently asked questions about Structure and Building Allowance. In this guide, we will delve into the discussion of the basic understanding of SBA along with the conditions that apply to make a claim.


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What is Structure and Building Allowance (SBA)?

The Structure and Building Allowance was introduced in the year 2018 and the relevant terms and conditions were applicable from the month of October 2018. This is known as SBA as well. The main purpose of introducing SBA is to relieve the cost that is spent on the physical construction of new buildings and structures. The government in the UK is interested to attract people for the sake of investments in the new projects of building commercial buildings and structures.

Moreover, renovating the existing buildings also come under the same interest. Some relevant examples of such facilities and structures include the construction of wholesale premises, retail, warehouses, factories, offices, tunnels, bridges, and walls. In Finance Act 2019, the new allowance was introduced to the people it became applicable from the month of July 2019.


What are the Key Features of Structure and Building Allowance?

The good news is that SBA will allow claiming the capital expenditures are qualifying and relevant to the construction of new structures and buildings. A period of 50 years can be claimed in this regard. From the month of April 2020, 3 percent of the expenditures were allowed to be given for a period of 50 years. The condition is to make the calculations on a straight-line basis. Some of the important and prominent key factors related to the construction of new buildings and structures are listed below:

  • Just like the case of capital allowances, the claim of Structure and Building Allowance will be associated with the process of tax returns.
  • In the case your accounting period is less than the period of  12 months, the amount of the allowance will be reduced.
  • On sale, there will not be any balancing adjustments.
  • If you are going to use the qualifying activity for the very first time, you can avail the relief as well.
  • There is a must rise of buildings and structures in the qualifying activity.
  • This is not applicable for any kind of dwelling or such building that is partly used for dwellings as well as for commercial purposes.
  •  If you are residing in the UK or overseas, you can still avail the relief. Your business must come under UK tax charges.
  • New conversions and renovations also come under this list and apply for the relief.


Eligibility Criteria for Types of Business Expenses

There is a certain type that is eligible allowed to qualify for the Structure and Building Allowance. The prominent types of the relevant expenditures are listed down:

  • The cost that is associated with the construction of new properties and the fees.
  • The capital expenditures are related to the incident repairs within the process of conversion that is happening for the existing commercial structure. Buildings and renovation incidental repairs are also qualified for this allowance.
  • Conversion of buildings, structures, or renovations is also part of qualifying expenditures.

Moreover, the claim for this allowance will not be accepted if the number of actual expenditures does not have any proof.


What is the Possibility to Claim Structure and Building Allowance for a Dwelling Land?

Any kind of expenditures that are involved with the dwelling renovation of a property or building will not be considered to be qualified for the allowance. By dwellings, we mean the buildings that are used for living in the longer run.

The buildings use for prisons, universities, schools, military and other such accommodations are a few relevant examples in this case. Moreover,  the care homes and hotel accommodations are considered qualified for the purpose of SBA.


What Happens After a Building is Sold Out?

It is allowed for the new owner of a property to claim the allowance if a property that qualifies for SBA is sold out. However, there are a few conditions that are discussed in the following:

  1. The claim should be used for qualifying activity of the building and allowance.
  2. There is no balancing adjustment available on disposal.
  3. In the case property or a building is sold out and now the record is transferred to the new owner of the property, It will be required to get the expenditures verifies by the original documents to claim for the allowance.


The Bottom Line

Now that you have gathered a fair amount of information about Structure and Building allowance, we can say that SBA is very useful for the owners of buildings even if the property is recently sold out, the new owner will be able to make a claim after providing the original documentation to complete the process. We hope these few minutes of reading will help to develop a better understanding and you will be able to handle your property and SBA affairs efficiently.


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Disclaimer: The information about the Structure and Building Allowance in this blog includes text and graphics of general nature. It does not intend to disregard any of the professional advice

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