What is the Structures and Buildings Allowance (SBA)?
The Structures and Buildings Allowance was introduced in October 2018 as a tax relief mechanism for businesses investing in new non-residential structures and buildings. Initially set at 2% per annum on a straight-line basis, the rate increased to 3% from April 2020, meaning businesses can claim tax relief of 3% of the qualifying expenditure each year for 33 and one third years.
SBA applies to the construction or renovation costs of non-residential structures and buildings used for qualifying activities. This includes commercial premises, office buildings, warehouses, factories, retail spaces, and certain agricultural buildings.
The key qualifying conditions are:
- The building must be new or involve structural work on an existing building
- Contracts signed and construction commenced on or after 29 October 2018
- The building must be used for a qualifying activity (broadly, any trade or property business except residential letting)
- The claimant must have an interest in the building
Why SBA Tax Relief Claims Are Irreversible
Here’s the critical point that has caught businesses and their accountants off guard…
Once you make an SBA claim on qualifying expenditure, you cannot change that claim to a different type of capital allowance, even if you later discover that the expenditure qualified for more generous relief, such as:
- Annual Investment Allowance (AIA), which provides 100% relief on qualifying plant and machinery up to £1 million
- 40 % First Year Allowances (FYAs), offering accelerated relief when compared to SBA% relief on certain equipment
- Full Expensing, introduced in April 2023, providing 100% first-year relief on qualifying new plant and machinery
- 50% First Year Allowance, also introduced in April 2023, providing accelerated relief on certain equipment for Ltd Companies only.
Avoid irreversible SBA mistakes. Access our Support Hub with guidance, checklists, and expert resources to get every claim right.
SBA vs Plant and Machinery: Common Mistakes UK Businesses Make
The root of most SBA errors lies in the complex distinction between “plant and machinery” and “structures and buildings.”
Plant and machinery generally includes:
- Equipment and apparatus used in the business
- Moveable fixtures and fittings
- Certain integral features (heating, cooling, electrical, water systems, lifts, and escalators when they qualify)
- Items with a functional purpose beyond mere setting or structure
Structures and buildings include:
- The basic framework of a building (walls, floors, roofs, staircases)
- Permanent fixtures that form part of the building’s fabric
- Items that are effectively part of the setting in which the business operates
The Stark Difference Between 3% SBA and 100% Capital Allowances
Consider a £300,000 expenditure. Under SBA, you claim £9,000 per year for 33 and one third years. Under 100% allowances, you claim the full £300,000 immediately. Why Claim 3% When You Can Claim 100%? The answer to this question should be obvious: you shouldn’t. Yet it continues to happen with alarming frequency. For a company paying corporation tax at 25%, that’s the difference between £2,250 annual tax relief and £75,000 upfront relief. The cash flow implications are enormous, and once you’ve gone down the SBA route, there’s no going back at the point tax returns are closed for amendment.
When Top Firms Get It Wrong
The two cases that prompted this article share disturbing similarities.
Both involved substantial property investments by growing businesses. Both used well-respected accountancy firms from the top 20. And both made the same critical error: claiming SBA on expenditure that qualified for 100% capital allowances. Let’s have a look at one of the cases to see what level of damage was done.
Case Study: SBA Tax Mistakes in Campsite Development
This client spent £649,954 developing campsite facilities between February 2022 and June 2025. The works included electrical installations, bathrooms, kitchen worktops, shower panels, joinery, and significant building works carried out by multiple contractors.
Their accountant claimed Structures and Buildings Allowance (SBA) on £570,434 of this spend. SBA provides relief at just 3% per year, equating to around £17,113 annually. In 2024, the business claimed only £11,780 in capital allowances, so most of the tax relief was pushed far into the future.
What Was Missed
A review identified several costs that should have qualified for 100% capital allowances (AIA or Full Expensing):
- Electrical installations (£7,682) – plant and machinery
- Bathroom fixtures and fittings (£806) – removable equipment
- Kitchen worktops (£3,822) – functional fixtures
- Shower panels (£2,470) – qualifying bathroom equipment
Total easily identifiable from invoices: £14,780
The bigger issue was the building contracts, which were never properly reviewed:
- Main contractor (£224,000) – likely includes electrical, plumbing, heating
- Secondary contractor (£17,000) – potential qualifying installations
- Joinery (£22,000) – fitted equipment and functional fixtures
A full capital allowances survey could have identified £150,000–£250,000+ as qualifying plant and machinery within the £649,954 spend. Instead, this was locked into 3% annual relief under SBA, rather than 100% upfront tax relief.
The Financial Impact
Let’s assume a figure of £150,000 should have qualified for 100% capital allowances.
What Actually Happened (SBA)
- Year 1 allowance: £4,500 (3% of £150,000)
- Corporation tax saving at 25%: £1,125
- Relief spread over: 33 and one third years
What Should Have Happened (100% Allowances)
- Year 1 allowance: £150,000
- Immediate corporation tax saving at 25%: £37,500
Too Late to Fix
The issue only came to light when the business later sought a review from capital allowance specialists. By then, the SBA claims had already been submitted and processed. The expenditure was permanently locked into the 3% SBA regime, and no analysis could undo the loss.
Ensure your SBA claims are accurate and avoid permanent mistakes. Access our guide to Structures and Buildings Allowance.
Why Are Accountants Making These Mistakes?
The frequency of SBA errors raises an important question: why are even large, reputable firms getting this wrong?
Capital allowances represent a specialised area of tax practice but also requires surveying & valuation disciplines. Without physically seeing the completed works and without having the surveying and valuation expertise, there are a number of reasons why accelerated tax allowances are missed. In addition, many good general practice accountants have’t the dedicated resources to properly analyse building expenditure and identify which elements qualify for different types of relief. The distinction between plant and machinery and structures and buildings requires understanding complex case law, HMRC manuals, and technical guidance that goes beyond standard tax compliance knowledge.
How UK Businesses Can Avoid Costly SBA Mistakes
Capital allowance work should be handled by specialists with specific expertise in this area, not general tax compliance staff. Before making any SBA claim, consult with advisors who regularly work on capital allowances and understand the complex distinction between structures and plant and machinery. The cost of specialist fees is trivial compared to the cost of professional negligence claims and destroyed client relationships.
Frequently Asked Questions about SBA
-
Can I change an SBA claim once it's been made?
Only in an open tax return. Once an SBA claim is submitted, it is permanent. Expenditure allocated to the SBA pool cannot be reversed or moved to other capital allowances, even if it later qualifies for more generous relief. Correct initial analysis is crucial to avoid costly, irreversible mistakes.
-
How do I know if my expenditure qualifies for plant and machinery allowances instead of SBA?
Determining whether expenditure qualifies as plant and machinery requires detailed analysis. Generally, items with a functional purpose beyond structure, like electrical systems, heating/cooling, lifts, and water systems, may qualify. Specialist advice is essential to identify qualifying items and avoid misallocating expenditure to SBA incorrectly.
-
What should I do if I suspect my accountant has incorrectly claimed SBA?
Obtain a second opinion from a capital allowance specialist to confirm whether corrections could be made and the required action to put it right, where possible. This process will also help ensure future building expenditure is reviewed correctly to prevent repeated mistakes.
-
Are there any circumstances where SBA is the right choice?
Yes. SBA applies to basic building frameworks like walls, floors, roofs, and foundations that have no functional purpose beyond providing structure. The decision should follow thorough analysis, as many projects include plant and machinery that should not be allocated to SBA.
-
Can I claim both SBA and plant and machinery allowances on the same building project?
Yes. Most projects contain both SBA-qualifying structures and plant/machinery elements. Proper segregation ensures each element receives the most beneficial tax treatment, maximising relief.
-
What is the Annual Investment Allowance, and how does it differ from SBA?
AIA provides 100% upfront tax relief on qualifying plant and machinery up to £1 million per year. Unlike SBA’s 3% annual relief over 33 and one third years, AIA delivers immediate tax benefits, dramatically improving cash flow for companies and offering far greater relief than SBA.
Frequently Asked Questions about SBA
-
What is "Full Expensing" and when does it apply?
Introduced in April 2023, Full Expensing allows 100% first-year tax relief on qualifying new plant and machinery with no upper limit. It is similar to AIA, but only applies only to new assets, offering immediate, substantial tax savings, and far exceeding the 3% annual relief under SBA.
-
My building was constructed before October 2018. Can I claim SBA?
No. SBA only applies to buildings where a construction contract was signed on or after 29 October 2018, or if not contracted, work began on or after that date. Renovations or structural work on older buildings after this date may qualify for SBA, but plant and machinery allowances should be explored first for more beneficial tax relief.
-
Can I go back and claim capital allowances on buildings purchased in previous years?
For plant and machinery, claims can generally be made within two years of the accounting period end. However, once SBA is claimed, and the deadline to amend the affected tax return has passed, the expenditure is locked in, and you cannot reallocate it, making the initial claim decision critical.
-
What happens to SBA if I sell the building?
SBA can be transferred to the purchaser under certain conditions, allowing them to claim the remaining allowances.
-
What happens if a property is leased from a landlord?
If a property is leased and the lease ends, a claim for SBA ends too. In certain circumstances, a landlord or new tenant may be able to continue to claim the SBA.
-
What items commonly qualify for capital allowances that accountants miss?
Commonly missed items include electrical and plumbing systems, HVAC, lifts, kitchen and bathroom fixtures, security systems, specialised lighting, fitted furniture, and leisure installations like pools or playgrounds. Many of these are misallocated to SBA, losing significant upfront tax relief.
Complete the form below to review a claim with our capital allowances experts and avoid irreversible errors...
Latest News
-
19 March 2026Spring Forecast 2026: Capital Allowances Remain Unchanged
The Spring Forecast 2026 confirmed that capital allowances will remain unchanged. This means the current Annual Investment Allowance, Full Expensing, and other key reliefs continue as previously announced. For businesses investing in plant, machinery, and commercial property, this provides short-term... -
3 March 2026How UK Businesses Can Avoid Costly Structures and Buildings Allowance (SBA) Errors
There’s a critical truth about Structures and Buildings Allowance (SBA) that many property developers, investors, business owners, and even experienced accountants aren’t aware of: once you’ve claimed SBA on expenditure, that decision is permanent and irreversible. If it’s been claimed...
Contact Us
Our expert team are here to help answer any of your capital allowances questions or enquires you have about your commercial property.