HMRC recently published new guidance on the structures and buildings allowance (SBA) following changes to the rules. This includes important information about how to claim it. Nicola Roby, Director at CHW explains what’s involved.
To recap, the 2018 Budget announced that businesses would be entitled to a new tax relief – SBA, where they spent money on or after 29 October 2018 on buying or improving their business premises. There was uncertainty over certain aspects though, including how to claim it. The good news is that the wrinkles have been ironed out and HMRC has published new guidance.
This hasn’t changed from the original proposal. The amount of deduction your business can claim is 2% per annum for expenditure on the construction of commercial property that does not qualify for capital allowances as either plant, machinery or integral features where all contracts for construction work on a project were entered into on or after 29 October 2018
Like other types of capital expenditure, the SBA must be claimed in the capital allowances section of your tax return or, if you run your business though a company, its return. If you have already submitted a tax return for the period in which you incurred costs which qualify for the SBA, you can make an amendment within the time allowed which is usually 12 months from the date of submission of the return.
HMRC’s guidance indicates that to claim the SBA, you must maintain a “written allowance statement”. There is no statutory form for the statement which means you can keep it in manuscript or digitally (or both). Whilst it doesn’t need to be provided to HMRC unless requested, HMRC says the allowance statement must include:
The statement is important because the claim period is up to 50 years and if ownership changes the buyer can only claim the SBA if they have a copy of the statement.
So, if you buy a used structure, you can only claim the allowance if you get a copy of the allowance statement from the previous owner.
For any extensions or renovations that were completed after you started using the structure, you can record separate construction costs on the allowance statement or create a new allowance statement.
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