The Structures & Buildings Allowance

In the Budget on 29 October 2018 The Chancellor announced a new form of Capital Allowances called the Structures & Buildings Allowance (SBA). 

The rules are not yet fully formed & the Government are consulting on various aspects of the relief but what follows is a brief summary of our current understanding of this new allowance.

The SBA will be given on eligible construction costs on commercial structures & buildings as long as all of the contracts for the physical construction works (including any preparatory works) are made in writing & entered into by the parties on or after 29 October 2018.  The renovation & alteration of existing buildings will be included, as will purchases of new structures & buildings from the developer (again subject to the contracts underpinning the physical construction works having been entered into on or after 29 October 2018).

SBAs will be given as a straight-line relief at 2% for 50 years.  A claim can only be made after the new structure or building is brought into use for a qualifying activity.

All of the costs associated with the physical creation of the asset, excluding the costs of obtaining planning permission, will qualify for the SBA, as will any spend on demolition or land alterations necessary for construction, & any other direct costs required to bring the asset into existence. 

The claimant must have an interest in the land on which the structure or building is constructed. However, expenditure on the acquisition of land or of rights over land, will not be eligible for the SBA.  Nor will the costs of obtaining planning permission.

Purchases of property new & unused from a developer will require a just & reasonable apportionment to segregate the value of land from the overall purchase price.

On a change in ownership the allowance will continue at the same rate.


In November 2019 ABC Ltd purchases a brand new care home property from a developer for £2.5m. (All of the contracts underpinning the construction of the home were entered into after 29 October 2018).  Of the £2.5m, £250,000 is considered to be the cost of the land.

ABC Ltd can claim SBA of (£2.5m – £250,000) x 2% = £45,000 every year for 50 years.

After 10 years ABC Ltd sells the care home to XYZ Ltd for £3m.

XYZ Ltd can claim SBA of £45,000 per annum for the next 40 years.

The sale of the care home would give rise to a Capital Gain for ABC Ltd, which would be calculated as follows:



















SBAs claimed (£45,000 x 10)









Net Gain



This example is fairly simple, however in reality the position will be more complicated due to the existence of other capital allowances that can be claimed on items contained within a building.  For example, Writing Down Allowances of 8% apply to Integral Features, as explained in our article on the Special Rate Pool.  These items would need to be extracted from the £2.5m cost of ABC Ltd’s care home & claimed for separately.

Other complications apply when a building is altered or has a temporary period of dis-use.