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Final draft regulations for structures and buildings allowance

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The government has laid final draft regulations before Parliament for the new non-residential structures and buildings allowance announced at Budget 2018 and has published a full summary of responses to its consultation process, covering both the regulations and the earlier technical note.

The structures and building allowance (SBA) was announced at Budget 2018 with immediate effect, through a power introduced by in Finance Act 2019 s 30 providing for relief to be given at a rate of 2% per annum over 50 years for expenditure incurred on or after 29 October 2018 in respect of newly-built or renovated non-residential structures and buildings.

The technical note published 29 October 2018 invited views on the key features of the new allowance. This initial consultation closed on 31 January 2019.

The government published draft secondary legislation on 13 March 2019 for public consultation, which took account of comments received on the technical note and the views of a consultative committee on an early draft of the regulations. This consultation closed on 24 April 2019.

Following the first consultation, the government agreed to certain modifications, including:

  • relief for capital expenditure incurred by lessees for leases with fewer than 50 years to run, so that any capital costs for the remainder of the 50-year period under the SBA will now be available to lessees as a cost for CGT purposes;
  • relief will continue to be available throughout temporary periods of disuse, provided buildings are not used for a residential purpose; and
  • any unrelieved expenditure following demolition will be available as a deduction in arriving at the capital gains computation.

Following comments received on the March draft of the regulations, the draft Capital Allowances (Structures and Buildings Allowances) Regulations 2019, laid on 18 June, incorporate further changes, including:

  • flexible rules to reduce administrative burden in calculating allowances on expenditure incurred after a building or structure has come into use;
  • giving allowances where a structure or building is purchased from the Crown or other person not within the charge to tax;
  • modified rules for claiming allowances when a person makes a contribution to another person;
  • allowing evidence of expenditure incurred to be obtained from any previous owner of the structure or building;
  • clarification that assets used for purposes ancillary to residential use include those assets situated on land within the curtilage of a residential structure or building;
  • modification of some amendments to TCGA 1992, to prevent double taxation and double deductions, clarify the rules on demolition, and introduce new rules for capital contributions;
  • clarification of the commencement provisions; and
  • clarification of the rules to allow relief for costs of renovation or conversion of a building where a developer is involved.

The government intends to publish further guidance in July, alongside the final regulations. This will provide examples of what constitutes ‘qualifying expenditure’ and definitions used in the legislation, such as ‘dwelling-house’ and ‘mixed use buildings’, and flexible rules for claims in respect of expenditure incurred after a building comes into use.


Issue: 1448
Categories: News