Structural and buildings allowance ('SBA')
On 29th October 2018 the Government announced the introduction of the SBA for all new projects starting on or after this date. The SBA is an annual allowance is calculated on the cost of the buildings and given at a rate of 2% on the straight line basis over 50 years.
In practice this means the cost of the land will have to be extracted from the new build cost before an SBA can be claimed. In addition, the cost of the fixtures will also need to be identified in order to accelerate the cash flow benefit of the capital allowances claim.
Eg. Acom has a year end of 31st December and builds a new head office a cost of £5m from 1st March 2019 to 1st January 2020. The land cost was £1m, the fixtures were £1m and the remaining build cost was £3m. The capital allowances claim in the year ending 31st December 2020 is £1,060,000 being £1m AIA on the fixtures and £60,000 SBA (£3m/50).