Structures and buildings allowance and why many businesses forget to claim it

The structures and buildings allowance, usually shortened to SBA, gives tax relief at 3% a year on qualifying construction, conversion or renovation costs for non-residential buildings and structures. The relief is spread evenly over 33⅓ years and applies to qualifying construction contracts entered into on or after 29 October 2018. It is not given automatically, you need an allowance statement to support it, and a year you do not claim is normally lost. That combination is why so many businesses never use it.

If your business has built, converted or bought commercial premises since late 2018, it is worth checking whether you are claiming the right capital allowance. The gap is easy to miss because nothing in your accounts necessarily prompts you to look for it.

What the structures and buildings allowance is

SBA is a capital allowance for the cost of building, converting or renovating non-residential structures. You deduct 3% of the qualifying cost from your taxable profits every year for 33⅓ years, starting from the later of the date the building first comes into qualifying non-residential use and the date the qualifying expenditure is incurred. It follows the building rather than the owner, so a buyer can usually carry on the claim for whatever period remains.

The rate started at 2% and rose to 3% from April 2020. It has stayed there since, and the April 2026 changes to plant and machinery allowances did not change SBA. A higher 10% rate can apply on qualifying spend within freeport and investment zone special tax sites, which is worth checking if your premises sit inside one.

What qualifies and what does not

The relief covers buildings and structures such as offices, warehouses, factories, shops, car parks and retaining walls. It is the cost of the structure itself that counts, not the land underneath it.

Costs that sit outside SBA are not always lost. Cleaning up contaminated or derelict land, for example, may attract land remediation relief, which works separately.

Why so many businesses forget to claim it

For years, most commercial buildings attracted no general tax relief, so many owners and some advisers still assume that is the position. A few other things keep the claim hidden.

Your management accounts show the building at cost less depreciation, and depreciation is not what the tax system gives relief on. The accounts look complete and nobody asks what the tax side should say.

Building projects also arrive as one large invoice or a single line in the fixed asset register. Splitting that into structural costs, plant and land takes someone to sit down and do it. It is also the sort of gap an external audit tends to surface, because the tax computation and the fixed asset register have to agree.

On purchases, the paperwork often goes missing. HMRC’s own guidance is that where there is no allowance statement, the qualifying expenditure can be treated as nil, so a claim you are entitled to in principle can vanish in practice.

We often see business owners treat the building as a cost that simply sits on the balance sheet, and the allowance only comes up when a sale or a funding review forces the question.

What it is worth in practice

Take an illustrative example. A company spends £500,000 constructing a workshop on land it already owns, and £80,000 of that cost relates to plant and machinery claimed under other rules. The qualifying SBA cost is £420,000.

At 3% a year, the annual deduction is £12,600. For a company paying Corporation Tax at 25%, that saves £3,150 a year, and the full £420,000 is relieved over 33⅓ years. The first and last years are time apportioned to the period of qualifying use.

With construction costs still rising, the cost base behind these claims is getting larger. Recoverable VAT is not part of the qualifying cost, and VAT on property can be adjusted later under the Capital Goods Scheme, so it is worth settling the VAT position before you finalise the figure.

Buying a building and the allowance statement

If you buy a used building that already has SBA history, you can only claim the remaining allowance if the seller gives you an allowance statement. Without one, HMRC treats the qualifying cost as nil. Ask for the statement at heads of terms, because chasing a seller after completion is much harder. It identifies the building and records the qualifying cost and the key dates.

For a new building that has never been used, the position differs. If you buy an unused structure from a developer, the price you pay can form the qualifying cost once land and other excluded items are removed. HMRC expects a just and reasonable split between building, land and anything else that does not qualify.

Buyers often miss this during due diligence, where the focus falls on price and title rather than tax attributes. A building with a full allowance history and a statement to match is simply worth more to a buyer than one without.

Selling a building and the capital gains catch

SBA has no balancing charge when you sell. Your claim stops on the date of sale, and the buyer can continue the same annual amount on the original qualifying cost for the remaining allowance period, provided the conditions are met.

The catch is on the capital gains side. Allowances you have claimed are effectively brought back into the capital gains calculation, increasing the gain or reducing the loss on disposal. Claiming is not free money. Over a long hold, however, it is still usually worth having, because you receive the tax relief earlier than any disposal tax effect.

If you are preparing your business for sale, have the allowance statement ready alongside your other property records. The same applies if the seller is an insolvent company. A liquidator or administrator selling the building still has to pass the statement on, which affects how attractive the property is to a buyer. If a property-owning business is under pressure, our insolvency practitioners and company voluntary arrangement team can explain where the building fits among the options.

Missed it in earlier years?

Claims go through your tax return. A company can generally make or amend a capital allowances claim up to 12 months after the filing date, which is broadly two years after the period ends. HMRC’s manual is clear that SBA not claimed for a period is lost for that period. Years that are now closed cannot normally be recovered, but you can usually start claiming from the earliest period still open.

That makes speed matter more than most people expect. If you are a sole trader or landlord, the claim sits in your self-assessment return. A tax accountant can tell you quickly which periods are still open and whether the cost records support a claim.

Where evidence of the original cost is patchy, a forensic accounting review can help rebuild it from contracts, invoices and bank records. Having that support in place is also useful if HMRC opens a compliance check. SBA is also one of several reliefs that go unused. R&D tax credits are another common area to review, so it is worth checking both together.

Splitting the invoice between SBA and plant

The practical skill is dividing a project invoice properly. The structural shell goes to SBA at 3%. Plant and integral features go to the faster allowances where available. The Annual Investment Allowance gives 100% relief on qualifying plant and machinery up to the annual limit, while the 40% first-year allowance can apply to new and unused main-rate plant and machinery bought on or after 1 January 2026. Anything left in the main pool receives 14% writing-down allowance from April 2026, and special-rate items usually receive 6%.

The faster allowances are normally worth more in the early years, so the aim is to put as much as is properly allowable on the plant side. Do the reverse and you trade immediate relief for a 33-year drip. This is where a careful cost split earns its fee.

If you operate in both the UK and Ireland

SBA is a UK relief. Ireland has its own rules for buildings under a separate tax code, so premises on both sides of the border need to be looked at separately rather than assumed to behave the same way.

A UK business that owns property abroad may still be able to claim SBA on it where the business is within the charge to UK tax. Our guide to managing overseas property covers the wider issues. Groups that operate in both the UK and Ireland should take advice from a team that understands both systems. Our cross-border accounting and tax team does that work every day.

Frequently asked questions

Can I claim SBA on a building I have bought?

Yes, if you hold the relevant interest and use the building for a qualifying activity. For a second-hand building, you need the seller’s allowance statement. For a new, unused building, the price paid to the developer can count once land and other excluded costs are removed.

Does SBA apply to residential property?

No. Houses, flats and other residential property are excluded. If a qualifying building moves into residential use, your entitlement stops for the period of non-qualifying use.

Is there a balancing charge when I sell?

No. Your claim ends and the buyer can carry on from the original qualifying cost for the remaining allowance period. The allowances you have claimed are, however, reflected in the capital gains calculation on disposal.

Can sole traders and landlords claim?

Yes, provided the building is used for a qualifying activity such as a trade or a commercial letting. Residential lettings do not qualify.

Check your position before the next filing deadline

An unclaimed year is a lost year, so the sooner you review this the better. With the Autumn Budget on 28 October approaching, it is a sensible moment to look at every relief your business holds. If you would like us to check whether you are claiming everything you should on your premises, get in touch with SCC Chartered Accountants and we will tell you where you stand.