Structures & Buildings Allowance (SBA): Tax Relief on Commercial Premises for Trades (2026)

What is the Structures and Buildings Allowance?

The SBA is a capital allowance that gives tax relief on the cost of constructing or acquiring non-residential structures and buildings. Relief is given at a flat 3% per year on a straight-line basis, which means the qualifying cost is written off evenly over roughly 33 1/3 years. Unlike plant & machinery allowances, there is no upfront 100% deduction and no balancing adjustment when you sell — the 3% simply continues each year until the full cost has been relieved.

Because the relief is so slow, the headline matters less than getting the rest of the picture right: making sure you claim it at all, and — crucially — making sure the parts of the spend that qualify for far more generous plant & machinery allowances are pulled out and claimed separately rather than buried in the slow 3% pool.

What qualifies for SBA

SBA applies to the construction or acquisition cost of non-residential structures and buildings used in your trade. Typical qualifying expenditure for a trade business includes:

• New commercial buildings: the construction cost of a new workshop, unit, garage, trade counter or office.
• Renovations and conversions: converting an old barn or redundant building into a working unit.
• Extensions: adding a bay, a mezzanine structure or a lean-to store to existing premises.
• The building element of a purchase: when you buy a commercial property, the part of the price attributable to the structure (not the land).
• Site preparation, demolition and professional fees directly related to the construction.

What does NOT qualify

The exclusions are where trades most often go wrong, so they are worth knowing in detail:

• The cost of land: bare land never qualifies. On a property purchase you must apportion the price between land and building, and only the building element attracts SBA.
• Residential property: dwellings and the residential parts of mixed-use buildings are excluded. A flat above a workshop, for example, is outside SBA.
• Anything that qualifies for plant & machinery allowances instead: integral features and fixtures — electrical wiring, heating and air systems, lighting, sanitaryware, lifts — are claimed as plant & machinery, not SBA. You cannot claim both on the same item.

That last point is the single most valuable thing to understand about SBA, so the next section deals with it on its own.

The crucial interaction with plant & machinery and the AIA

When you build or fit out premises, the total spend is not one homogeneous lump. A chunk of it — the integral features and fixtures — qualifies for plant & machinery allowances, and most of that can be relieved immediately at 100% through the Annual Investment Allowance (AIA), which covers up to £1 million of qualifying plant & machinery spend per year. Compare that to the 3% a year SBA on the building shell, and the difference is dramatic.

Integral features and fixtures that should be carved out and claimed as plant & machinery typically include:

• Electrical wiring and the power system
• Cold and hot water systems and sanitaryware (toilets, sinks, taps)
• Space and water heating, ventilation and air conditioning
• Lighting, including external and security lighting
• Lifts, hoists, and certain external solar shading

This is why a proper capital allowances apportionment on a new build or fit-out is so valuable. If everything is dumped into SBA, you relieve it at 3% a year over 33 years. If the integral features are correctly identified and claimed through the AIA, you can relieve that slice in the year you spend it. On a six-figure project the cash-flow difference runs into tens of thousands of pounds of tax. It is well worth paying a specialist or your accountant to do the split properly.

SBA vs plant & machinery allowances at a glance

Worked example: a workshop build

Say you run a joinery business as a limited company and build a new steel-frame workshop on land you already own. The construction invoices total £200,000. Before you claim anything, you ask your accountant to apportion the spend between the building structure and the integral features that qualify as plant & machinery.

• Building shell (frame, cladding, roof, floor slab, doors): £155,000
• Integral features (wiring, lighting, heating, water, sanitaryware): £45,000

The £45,000 of integral features is claimed through the Annual Investment Allowance, giving a 100% deduction of £45,000 against profits in the year of spend. At a 25% corporation tax rate that is roughly £11,250 of tax saved straight away.

The £155,000 building shell qualifies for SBA at 3% a year — that is £4,650 per year of relief, continuing each year until the full £155,000 is written off in about 33 years. At 25% tax that is roughly £1,162 of tax saved per year from the structure.

Note the contrast. The £45,000 carved out as plant & machinery delivers its full benefit immediately. Had it been left in the SBA pool, you would have waited decades to relieve it at 3% a year. The apportionment is what turns a slow relief into a meaningful one — and it costs nothing to lose if you skip it.

The allowance statement — passing SBA to a buyer

SBA does not survive a sale automatically. For a buyer of a commercial building to continue claiming SBA, the seller must provide an allowance statement. This is a written record showing the date the building first came into qualifying use, the total qualifying construction cost, and the date you incurred it.

Without the allowance statement, a buyer cannot claim SBA on the building they have just bought — so the document has genuine value, and you should request it when you buy and prepare it when you sell. Keep it with your property records permanently; you may need it many years later.

SBA reduces your base cost for capital gains

There is a trade-off to be aware of. The SBA you claim over the years reduces the base cost of the building for capital gains purposes when you eventually sell. In effect, the relief you took as income tax or corporation tax deductions is clawed back as a larger chargeable gain on disposal.

This is not a reason to skip claiming — for most trades, relief now at your marginal rate is worth more than the deferred gain, and you may never sell. But it does mean SBA is best thought of as a timing benefit on the structure rather than a permanent giveaway. Plant & machinery allowances, by contrast, are not added back to your capital gains base cost in the same way, which is another reason to maximise the plant & machinery slice.

How to claim SBA

You claim SBA on your tax return — the company corporation tax return (CT600) for a limited company, or the self-employment / partnership pages of the self assessment return if you trade as a sole trader or partnership. The key practical steps are:

• Confirm the building is in non-residential qualifying use and identify the date that use began.
• Establish the qualifying construction or acquisition cost, excluding land.
• Apportion the spend, carving out integral features for plant & machinery / AIA.
• Prepare an allowance statement recording the cost and the date use began.
• Claim 3% of the qualifying cost each accounting period, on a straight-line basis.

If you buy a second-hand building, you claim based on the original qualifying construction cost as shown on the seller's allowance statement, continuing the remaining relief period.

Record keeping

Because SBA runs for over three decades, your records need to outlive most of your other paperwork. Keep the following safely and indefinitely:

• All construction invoices and the contract, including professional fees
• The land-versus-building apportionment for any purchase
• The capital allowances apportionment splitting structure from plant & machinery
• The allowance statement showing first qualifying use and total cost
• A running schedule of SBA claimed each year and the remaining balance

Good digital records here protect both your annual relief and your eventual capital gains computation. If you track jobs, costs and documents in one place, keeping the premises paperwork attached to the project is far easier than reconstructing it years later.

FAQ

Can I claim SBA on a building I rent out to another trade?

Yes — SBA is available where the building is used for a qualifying activity, including commercial property letting, provided the structure is non-residential. Residential lets are excluded.

Do I get any relief in the year I sell?

There is no balancing allowance or balancing charge on the SBA itself when you sell. Instead the SBA you have claimed reduces your base cost, increasing the chargeable gain. The buyer picks up the remaining SBA via your allowance statement.

Is it worth claiming such a small annual amount?

On a modest spend the 3% can feel trivial, but it is free relief you would otherwise leave on the table, and it compounds across the life of the asset. The bigger win is almost always the apportionment that moves integral features into the AIA.

Can I claim SBA and plant & machinery allowances on the same project?

Yes — on different parts of the spend. The building shell goes into SBA; the integral features and fixtures go into plant & machinery. You just cannot claim both on the same item.

The bottom line

SBA is slow but real. The practical message for any trade investing in commercial premises is this: claim the 3% on the structure, and pay for a proper apportionment so the wiring, heating, lighting and sanitaryware land in the AIA at 100% rather than crawling through the SBA pool. Keep your allowance statement and construction records permanently, and remember the relief reduces your capital gains base cost on a future sale. Get those four things right and a premises build delivers far more tax value than most trades ever capture. As always, confirm the figures and treatment with your accountant for your specific situation.