In the Autumn 2018 Budget, the government introduced a new capital allowance for new non-residential structures and buildings.
The government has welcomed comments up until 24 April 2019. An overall response to consultation responses will be published in May 2019. The published version of this legislation will be in the format of a Statutory Instrument.
In summary, the proposal is as follows:
- Two percent, flat rate relief for a period of 50 years.
- Relief on new commercial structures and buildings.
- Relief is available on costs of physical construction, demolition costs prior to construction and any other direct costs to bring the structure/ building into existence.
- Land costs and costs of obtaining planning permission in particular are not eligible costs and no relief would be available.
- On sale of the structure/ building, there would be no balancing adjustment. Instead the purchaser will take over the remaining part of the 50-year period.
- The integral features and the expenditure on such, will continue to qualify for the Writing Down allowance and Annual Investment allowance as Plant and Machinery, as before.
- Structure and Buildings allowance will not qualify as Annual Investment Allowance.
- Where a structure or building is converted or renovated and becomes a qualifying asset, the expenditure on the conversion/ renovation will be eligible for the relief.
- Claims could only be made from when the structure/ building comes into use.
- In addition, dwelling houses or construction of such do not qualify for the relief.
- Where commercial property is not in use, there would be no prohibition on the reliefs during the period.
- Where leases are issued on the commercial property, and the lease is for less than 35 years, the SBA can be claimed by the lessee if the capital amount paid for the lease is more than 75 per cent of the of the capital amount paid plus the value of the retained interest by lessor.
Once in force, the legislation will apply to eligible costs incurred and contracts entered into after 29th October 2018.