Introduced in October 2018, the SBA offers a 3% annual deduction on qualifying expenditure for constructing or renovating non-residential structures. This allowance spreads the relief over 33 1/3 years, supporting businesses with long-term financial benefits.

Qualifying Expenditure:

• The SBA applies to capital expenditure incurred on the construction, renovation, or conversion of non-residential structures and buildings.
• Qualifying costs include construction, renovation, and conversion expenses, as well as associated professional fees, such as architects and surveyors.

Eligible Structures and Buildings:

• The allowance is available for non-residential properties, including offices, retail premises, factories, and warehouses.
• Residential properties, such as homes and student accommodation, do not qualify for SBA.

Timing:

• The allowance is available for expenditure incurred on or after 29 October 2018.
• The building or structure must be brought into use for a qualifying activity, such as a trade, profession, or vocation.

Ownership:

• The claimant must own the interest in the building or structure and use it for a qualifying activity.
• Leased properties may qualify if the leaseholder incurs the expenditure and meets the necessary conditions.

The Capital Allowances Act 2001 is an Act of the Parliament of the United Kingdom that governs how capital allowances are deducted from income taxable under the Income Tax Act 2007 and the Corporation Tax Act 2009.

Capital Allowances are a form of corporation tax or income tax relief for some, but not all, capital expenditure. A business will reduce, or write down, the value of many of its capital assets in its accounts year by year using a process known as depreciation or amortisation.

Through an amended personal or corporation tax return, we can replace depreciation with capital allowances, which can be used to reduce taxable profits as well as produce a tax rebate.

Tax relief is not generally given in full at the time the expenditure is incurred, but instead is spread over a number of years. Different types of expenditure attract allowances at different rates. This is because capital allowances, broadly speaking, take the place of depreciation charged in the commercial accounts.

Allowances are available for expenditure on:

Capital Allowances give taxpayers relief for certain kinds of expenditure. The Act deals with who gets relief for what expenditure, when and how.

Not all assets qualify for allowances; for instance, expenditure on land does not generally qualify. The most common type of allowance is that on plant and machinery.

Capital Allowances are optional but must be specifically claimed. The nuances of the act require experts in identifying and valuing these items. This is why HMA Tax works with thousands of commercial property owners each year in claiming Embedded Capital Allowances.