Are you missing out on tax relief for new commercial property construction?

Posted on 30th October 2019 by Streets -  What's trending?

Image to represent Are you missing out on tax relief for new commercial property construction?

This new allowance is available to companies and businesses (including property rental businesses) at a flat rate of 2% per annum over 50 years.

The costs eligible for the allowance are limited to the costs of physically constructing new structures and buildings. It does not include the cost of the land or the costs of acquiring rights over the land.

Where a previously constructed building or structure is acquired from a developer the purchase price will need to be apportioned to determine the non-qualifying land element. Where a company or business constructs a building or structure itself it will be able to include the cost of demolition or land alterations necessary for construction.

The relief is available from when the building or structure is brought into use for a qualifying activity. Any expenditure incurred more than seven years before the activity commences will not qualify.

What structures and buildings are likely to qualify?

The allowance is only available for the new construction of new commercial structures and buildings. This includes offices, retail and warehouse premises, factories, hotels and care homes as well as structures like walls, bridges and tunnels.

It does not include residential property or other buildings primarily intended for long term residence – houses, flats or university accommodation.

Home office where the workplace is an integral part of the home will also not qualify.

Interaction with Capital Allowances

Expenditure can only be claimed once. Therefore if you have fixtures and fittings that attract capital allowances as plant and machinery then you will want to make a claim here in preference as the tax relief is far quicker, especially if the annual investment allowance is available at 100% in the year of expenditure.

Apportionment of Expenditure

If a building is divided into separate parts and some parts qualify for the allowance and some do not, an appropriate proportion of the expenditure can be claimed for the allowance.

However if 10% or less of the costs qualify then none of the costs can be claimed.

Subsequent renovations and disposals

Subsequent capital expenditure on a qualifying building or structure after it has been brought into use is also eligible for the 2% annual claim.

Where a qualifying building is sold there are no balancing adjustments on disposals. Instead the new owner will be able to continue claiming the relief for the remainder of the 50 year qualifying period provided it continues to be used by them for a qualifying period.

For Capital Gains tax purposes the cost of the building is reduced by the value of the Structure and Buildings allowance claimed.

The structures and buildings allowance is not widely known about, nor is its application and use fully understood. Therefore, we advise that professional tax advice is sought to ensure the appropriate tax reliefs and benefits are realised.


No Advice

The content produced and presented by Streets is for general guidance and informational purposes only. It should not be construed as legal, tax, investment, financial or other advice. Furthermore, it should not be considered a recommendation or an offer to sell, or a solicitation of any offer to buy any securities or other form of financial asset. The information provided by Streets is of a general nature and is not specific for any individual or entity. Appropriate and tailored advice or independent research should be obtained before making any such decisions. Streets does not accept any liability for any loss or damage which is incurred from you acting or not acting as a result of obtaining Streets' visual or audible content.


The content used by Streets has been obtained from or is based on sources that we believe to be accurate and reliable. Although reasonable care has been taken in gathering the necessary information, we cannot guarantee the accuracy or completeness of any information we publish and we accept no liability for any errors or omissions in material. You should always seek specific advice prior to making any investment, legal or tax decisions.

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