Structures and Buildings Allowance

The Structures and Buildings Allowance (SBA) lets you claim tax relief on the construction or renovation costs of non-residential buildings and structures. You can claim 3% of qualifying costs each year for up to 33 and one third years. This guide explains what qualifies, how much you can claim,...

What is the Structures and Buildings Allowance?

The Structures and Buildings Allowance is a type of capital allowance (a tax deduction that reduces your taxable profit) for spending on non-residential buildings and structures. Unlike some other capital allowances that give you tax relief quickly, the SBA spreads the relief over a long period.

To claim, you must have paid some or all the costs towards purchasing, constructing or renovating the structure. All construction contracts must have been signed on or after 29 October 2018.

How much can you claim?

The current rate is 3% per year of the qualifying construction costs. This rate applies to:

Income tax: expenditure from 6 April 2020 onwards
Corporation tax: expenditure from 1 April 2020 onwards

For earlier expenditure (between 29 October 2018 and these dates), the rate was 2%.

The allowance period lasts 33 and one third years from when you start your claim. This means you can recover 100% of qualifying costs over this period (3% × 33⅓ years = 100%).

What structures qualify?

The structure must meet all these conditions:

It must not be, and must never have been, used as a residence
It must be used for a qualifying activity (see below)
You must have an allowance statement (explained later)

Qualifying activities include:

Any trade, profession or vocation
A UK or overseas property business (but not residential lettings or furnished holiday lettings)
Managing the investments of a company
Mining, quarrying, fishing and other land-based trades such as running railways and toll roads

The activity must be taxable in the UK.

What costs can you claim?

You can claim on construction costs only, which include:

Design fees
Preparing the site for construction
Construction works
Renovation, repair and conversion costs
Fitting out works

What you cannot claim

You cannot claim on:

Any residence or structures in the grounds of a residence
Costs that also qualify for plant and machinery allowances
Costs you've already used to claim another allowance
Land costs
Integral features and fixtures (these qualify for different capital allowances)
Planning permission fees
Financing costs such as loan interest
Legal expenses or public enquiry costs
Landscaping or land reclamation
Costs covered by grants or contributions

If you paid more than market value, you can only claim on the original market value or actual construction costs, whichever is lower.

Different purchase scenarios

If you build or renovate

Claim on the amount you spent on construction costs, even if you lease the structure from someone else.

If you buy from a developer

Unused structure: Claim on the price you paid, minus any non-qualifying costs. If the structure was sold by the developer more than once before you use it, claim the lower of the developer's original sale price or what you paid.

Used structure: Claim on the developer's original construction costs.

If you buy from a non-developer

Unused structure: Claim on the lower of the price you paid or the original construction cost (minus non-qualifying items).

Used structure: Claim on the same amount the previous owner was entitled to claim. You take over the remaining allowance period.

If a previous owner claimed a research and development allowance, you can claim what's left of the allowance period, but not more than you paid for the structure.

The allowance statement

You must have an allowance statement before you can claim. If you're the first person to use the structure, you must create this written statement yourself.

The allowance statement must include:

Information to identify the structure (address and description)
The date of the earliest written contract for construction
The total qualifying costs
The date you started using the structure for a non-residential activity

If you buy a used structure, you can only claim if the previous owner gives you a copy of their allowance statement.

For extensions or renovations completed after you started using the structure, you can either record these costs on the existing allowance statement or create a new one.

When to start your claim

Start your claim from whichever date is later:

When you started using the structure for a qualifying activity
When you're due to pay for the structure or construction

You can choose to group additional qualifying costs together and start claiming them from the first day of your next accounting period.

How to claim

Claim the allowance on your tax return. For the 2025/26 tax year, this means including it on your Self Assessment return (for sole traders and landlords) or your company's Corporation Tax return.

You must keep records of the earliest construction contracts. These can be formal contracts, emails or board meeting notes.

When your allowance is adjusted

Your allowance may be adjusted if:

Your accounting period is more or less than a year
Not all qualifying conditions are met on every day of your accounting period
Your entitlement ends during your accounting period
The structure is used for more than one activity

The allowance is calculated proportionally based on the number of days in your accounting period or when conditions were met.

Special rules for long leases

If you lease a structure on a lease of 35 years or more, you may be able to claim the allowance instead of the lessor if the value of their interest in the structure is less than one third of the capital you paid for it.

You can continue claiming if you take over someone else's lease within the allowance period. Otherwise, the lessor may claim the remaining allowance.

If you sell the structure

When you sell or dispose of the structure, your allowances stop. You must pass on a copy of the allowance statement to the buyer so they can continue claiming (if they meet the qualifying conditions).

Claiming the SBA may increase the Capital Gains Tax or Corporation Tax you pay when you sell the structure, because the allowances reduce the base cost. Consider whether claiming the allowance is right for your situation before proceeding.

Record-keeping

Keep detailed records including:

All allowance statements (created by you or received from previous owners)
Construction contracts or earliest written agreements
Evidence of qualifying expenditure
Dates when the structure came into use
Details of any periods when the structure wasn't used for qualifying activities

Sources

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.