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Structures and Buildings Allowance UK: How to Claim SBA

Structures and buildings allowance UK can reduce your taxable profits when you invest in non-residential property or carry out qualifying building works. This guide explains who can claim, what counts as qualifying expenditure, how to calculate the allowance and the practical steps to include a building allowance claim in your company tax return.

What is the structures and buildings allowance UK?

Structures and buildings allowance UK, commonly called SBA, is a form of capital allowance introduced to give tax relief for the creation or improvement of non-residential structures and buildings. It lets business owners and limited companies deduct a portion of qualifying expenditure from taxable profits each accounting period.

Structures and buildings allowance sits alongside other capital allowances and commercial property tax reliefs. It is aimed at long-term investment in buildings and major fabric works rather than short-life plant and machinery.

Who can claim SBA capital allowances?

  • Companies, partnerships with a company as a partner and sole traders can claim SBA where they incur qualifying capital expenditure.
  • Landlords operating through a limited company can usually claim, provided the property is used for qualifying business activity or rented out as a non-residential commercial property.
  • Investors and developers may also claim SBA where they incur qualifying expenditure in the course of their trade or property business.

Qualifying status often depends on how the building is used. Residential dwellings generally do not qualify, unless the works are part of a qualifying commercial activity or certain mixed-use situations apply.

For more details about how SBA interacts with company reporting, see our Statutory Accounts & Tax service.

What expenditure qualifies for structures and buildings allowance UK?

SBA applies to the capital cost of constructing, reconstructing or renovating a qualifying non-residential structure or building. Key points on qualifying expenditure include:

  • Costs that form part of the fabric of the building – for example foundations, external walls, internal structural walls, floors and permanent fixtures that are integral to the building.
  • Expenditure incurred on improving or renovating a qualifying non-residential building.
  • Certain professional fees and site preparation costs that relate directly to the qualifying construction or renovation work.

Non-qualifying items include land value, plant and machinery (these may be claimed under other capital allowances), and repairs or maintenance that do not create a new or improved structure.

If you are unsure whether a cost is SBA-qualifying or should be treated as plant and machinery for capital allowances, speak to an adviser. Misclassification can materially affect tax outcomes.

How SBA works – the basic calculation

SBA gives a tax deduction based on a proportion of qualifying expenditure each year. The standard approach is to spread the qualifying capital cost evenly over a set number of years, creating an annual allowance.

A simple worked example to illustrate a building allowance claim:

  • Purchase price of commercial unit: £500,000
  • Land value (non-qualifying): £100,000
  • Qualifying SBA expenditure: £400,000
  • Typical SBA rate (example): 2% per year

Annual SBA tax deduction = £400,000 x 2% = £8,000 per year.

That £8,000 reduces taxable profits available for corporation tax in each qualifying accounting period until the allowance is exhausted. Please check the current SBA rate and rules on GOV.UK before applying the exact percentage to your figures – see the official guidance at https://www.gov.uk/guidance/structures-and-buildings-allowance.

Practical steps to prepare a building allowance claim

Gathering the right documentation and preparing the claim carefully will reduce queries from HMRC and ensure you maximise available relief.

  • Establish the qualifying expenditure:

    • Get a purchase contract or cost schedule that separates land and building costs.
    • Use a professional valuation if the land/building split is not explicit in documentation.

  • Compile invoices and contracts for construction or refurbishment work.

  • Identify professional fees and site costs that directly relate to the qualifying works.

  • Keep records of the dates when expenditure was incurred and the accounting period dates for your company.

  • Prepare a capital allowances computation that shows the SBA addition and how it feeds into your corporation tax computation.

Good record keeping makes the claim straightforward and supports your position in the event of an enquiry.

Making the claim in practice – corporation tax returns and accounts

SBA claims are made through your corporation tax computations and the company tax return (CT600). Key practical requirements include:

  • Show the annual SBA deduction within your capital allowances computation and deduct its value from profits on the tax return.
  • Ensure statutory accounts and tax computations reconcile. SBA affects profit before tax in the accounts and taxable profit in the CT600.
  • Retain supporting schedules and calculations for at least the statutory retention period in case HMRC asks for evidence.

If you use outsourced accounting software or a cloud bookkeeping service we can help integrate the SBA entries – see our Bookkeeping & Xero service.

Special situations – conversions, leasehold improvements and partial use

SBA can be complex where a building is converted from one use to another or when it is part residential and part commercial.

  • Conversions and refurbishments: Expenditure on converting a non-residential building or changing its use to qualifying commercial use can be eligible. You must be able to identify the qualifying costs.

  • Leasehold improvements: Qualifying construction works on a leasehold can attract SBA, provided the expenditure meets the qualifying tests and is not plant and machinery.

  • Mixed-use properties: If a building has both qualifying non-residential and non-qualifying residential elements you will normally need to apportion expenditure on an appropriate basis.

In these cases, a detailed costing and tax analysis is usually required to avoid losing available relief.

Interaction with other capital allowances and tax reliefs

SBA sits alongside other capital allowances and property tax reliefs. You should consider interaction with:

  • Plant and machinery capital allowances for items removable or not integral to the structure.
  • Annual Investment Allowance and other temporary first-year reliefs for qualifying items.
  • VAT considerations on property transactions and building works.

For VAT issues related to building purchases and works, consult our VAT team so you can understand whether input tax recovery, partial exemption or margin schemes apply.

Disposal, sale or change of use – what happens to your SBA claim?

When you dispose of, or change the use of, a building that has attracted SBA there can be a balancing adjustment.

  • A sale may trigger a balancing allowance or a balancing charge depending on the proceeds and tax written down value.
  • If part of the building ceases to be used for a qualifying purpose you may need to apportion allowances and account for adjustments.

Balancing charges can increase taxable profits in the year of disposal. Always model the tax impact before a sale or change of use.

Common mistakes and how to avoid them

Avoidable errors can delay recovery or lead to an HMRC enquiry. Common issues include:

  • Failing to separate land and building values properly.
  • Misclassifying plant and machinery as structural expenditure or vice versa.
  • Not keeping sufficient supporting evidence such as invoices, contracts and valuations.
  • Overlooking the need to make claims in the correct accounting period.

A methodical approach to documentation and a formal capital allowances computation typically prevents these problems.

When to get professional help – and how Figures can support you

Structures and buildings allowance UK involves technical facts and careful treatment in your tax return. Professional support is worthwhile where:

  • You have significant building or conversion costs to capitalise.
  • The property has a mixed use or complex ownership structure.
  • You need to model the tax and cashflow consequences of claiming SBA.

Figures offers practical support to UK small businesses and company directors. Our services such as Statutory Accounts & Tax and Fractional CFO can help you prepare a robust SBA capital allowances claim and integrate it into management reporting.

UK tax and legal accuracy

This article is for informational purposes only and does not constitute professional tax or financial advice. Please speak to a qualified accountant before taking action. Relevant tax year: 2026/27.

Frequently asked questions

What is the difference between SBA capital allowances and plant and machinery allowances?

SBA targets expenditure that is integral to a building's structure and fabric. Plant and machinery allowances relate to assets that are not integral or can be removed, such as boilers, lifts in some circumstances and certain fixtures. Correct classification is important because the rates, timing and rules differ.

Can a landlord claim structures and buildings allowance UK on a rental property?

Yes, landlords can claim SBA on non-residential rental properties or qualifying commercial developments. Residential dwellings usually do not qualify. If your property has mixed use you will need to apportion qualifying expenditure.

How long does the SBA relief last?

SBA is given as an annual allowance that spreads the qualifying expenditure over a number of years. The allowance is designed to provide relief over the asset's useful life; check current rates and any transitional rules on GOV.UK or with your accountant.

Do I need a professional valuation to split land and building values?

You do not always need a formal valuation but you must be able to demonstrate a reasonable and supportable apportionment between land and building. Where contract documents do not state the split, a professional valuation or a clear and well-documented methodology is strongly recommended.

How do I include an SBA claim on my company tax return?

Include the annual SBA deduction as part of your capital allowances computation that feeds into the CT600 corporation tax return. Ensure the amounts reconcile with your statutory accounts and retain supporting schedules and documents.

Summary and next steps

Structures and buildings allowance UK can deliver valuable tax relief on qualifying commercial building expenditure, but successful claims need careful cost allocation, documentation and correct treatment on the corporation tax return. Start by identifying qualifying costs, separating land and building values and compiling robust supporting evidence.

If you would like specialist help preparing an SBA claim or modelling the tax impact for a property acquisition or development, we can help. Book a discovery call with Figures to discuss your project and how we can support your tax and reporting needs — book a discovery call.

For further official guidance and legislative detail, see the HMRC SBA guidance at https://www.gov.uk/guidance/structures-and-buildings-allowance.