What buildings and structures qualify for SBA?

SBA is available for: new commercial buildings (offices, retail units, factories, warehouses, hotels, care homes), conversions of non-residential property to a different non-residential use, renovations of existing commercial property (if the building is brought back into use), and structures such as bridges, tunnels, roads, docks, and fixed infrastructure. SBA does not apply to: residential property of any kind (including houses, flats, HMOs, care homes that are dwellings), land costs, plant and machinery (which have their own capital allowances), and buildings acquired before 29 October 2018 (the qualifying date for new construction contracts — not purchase date).

What is the SBA rate and how is it calculated?

The standard SBA rate is 3% per annum on a straight-line basis, applied to the original qualifying cost (not a reducing balance). This gives full relief over 33.3 years. The first-year claim is proportionate to the number of days in the accounting period from first use. For example, a building with qualifying costs of £1,000,000 earns SBA of £30,000 per year (3% × £1,000,000), giving a corporation tax saving of £7,500 per year at the 25% CT rate. Enhanced rates apply in Freeport and Investment Zone tax sites: 10% SBA per annum over 10 years, available until September 2031 (with possible extension).

How does SBA work when a building is sold?

When a building on which SBA has been claimed is sold, the buyer takes over the claim based on the remaining unclaimed SBA from the original qualifying cost. The seller receives an Allowance Statement confirming the original qualifying construction cost and the date of first use — this must be provided to the buyer. If the seller has claimed SBA, no balancing allowance or balancing charge arises on disposal (unlike plant and machinery). The buyer claims the remaining 3% per annum on the original cost for the remaining years. If the building is demolished before the end of the 33.3 year period, a final balancing allowance is available for the unclaimed amount.

Can residential landlords claim SBA?

No. SBA is specifically excluded for residential property. You cannot claim SBA on houses, flats, bedsits, HMOs, student accommodation, care homes that are dwellings, or any building designed or adapted for residential use. The relief is only for commercial property used in a trade or business. Hotels and care homes that are registered and run as businesses (not as dwellings) can qualify if they meet specific conditions. Mixed-use buildings must apportion the qualifying costs between commercial (eligible for SBA) and residential (not eligible) elements.

What costs qualify within an SBA claim?

Qualifying SBA expenditure includes the cost of constructing the building structure: foundations, walls, roof, floors, windows, and doors. It also includes conversions and renovations expenditure, professional fees (architect, surveyor, structural engineer) that are incapable of being capitalised separately, and the cost of demolishing an existing building to make way for the new construction. It excludes land costs (non-depreciable), the cost of plant and machinery fitted to the building (which qualify for separate capital allowances), costs attributable to residential use, and any element of the cost that has been claimed under a different allowance such as AIA.

Structures & Buildings Allowance Calculator 2026

Q: What is the Structures and Buildings Allowance (SBA)?

The Structures and Buildings Allowance (SBA) is a UK capital allowance that provides tax relief on the cost of constructing, converting, renovating, or purchasing new commercial buildings and structures. Introduced from 29 October 2018, it allows businesses to claim an annual deduction of 3% of qualifying expenditure against their taxable profits, spread over 33.3 years (the full cost is relieved over this period). SBA applies to both corporation tax and income tax payers. It replaced the Industrial Buildings Allowance (abolished in 2011) and significantly widened the scope of allowable buildings to include offices, retail premises, hotels, factories, and warehouses — any non-residential commercial building.

Last updated: March 2026

Structures and Buildings Allowance Calculator 2026

Calculate annual SBA, total tax savings over 33.3 years, and balancing allowance on disposal

Qualifying Construction / Purchase Cost (£) Exclude land cost and plant & machinery (claimed separately)

Date Construction Completed / First Use

Building Purpose

Corporation Tax / Income Tax Rate (%)

Planned / Estimated Disposal Proceeds (£) — Optional Used to estimate balancing allowance if sold before full SBA period

Years Property Will Be Owned (for disposal calculation)

Structures and Buildings Allowance Calculation

Annual SBA Deduction

£0

Qualifying Cost: £0

SBA Rate: 3%

Annual SBA Allowance: £0

Annual Tax Saving: £0

Total Allowance Period: 33.3 years

Total Relief Over Full Allowance Period

Total SBA Claimable (full period): £0

Total Tax Saved (full period): £0

Disposal Analysis (if applicable)

SBA Claimed After 0 Years: £0

Unclaimed SBA at Disposal: £0

Buyer's Allowance Statement Value: £0

Calculation pending — click Calculate

Important: SBA only applies to contracts entered into on or after 29 October 2018. Residential property does not qualify. You must hold a valid Allowance Statement from the previous owner (for purchased buildings) to pass on SBA entitlement. Consult a tax adviser to confirm qualifying costs.

SBA Rates and Eligibility at a Glance

Property / Location Type	SBA Rate	Full Period	Available From
Standard commercial building	3% p.a.	33.3 years	29 Oct 2018
Freeport / Investment Zone tax site	10% p.a.	10 years	Eligible zones only
Residential property	Nil	–	Does not qualify
Industrial Buildings Allowance (abolished)	–	–	Abolished 2011

7 Expert Insights on Claiming Structures and Buildings Allowance

1. SBA Eligibility — What Qualifies and What Does Not

The Structures and Buildings Allowance applies to non-residential buildings and structures where the contract for construction was entered into on or after 29 October 2018. Qualifying property types include: commercial offices, retail units, industrial premises, factories, warehouses, hotels (where the guests are not in occupation as their main residence), care homes registered as care businesses, research facilities, sports pavilions, and civil engineering structures (bridges, tunnels, roads within a business property). Not qualifying: any form of residential accommodation (houses, flats, student halls, HMOs, care homes as dwellings), land, plant and machinery (claimed separately), and buildings where the construction contract predates 29 October 2018, even if construction completed or purchase occurred after that date.

2. Which Costs Qualify Within an SBA Claim

Not all costs associated with a building project qualify for SBA — careful cost segregation is essential. Qualifying SBA costs: the structural cost of construction (foundations, walls, roof, floors, windows and external doors), costs of converting or renovating an existing commercial building, demolition of an existing structure to clear the site for the new building, and professional fees (architect, surveyor, structural engineer) that directly relate to the building structure and are not separately identifiable as plant or services. Not qualifying for SBA (but may qualify for other allowances): land acquisition cost (not depreciable), plant and machinery within the building (electrical, plumbing, HVAC, lifts — qualify for capital allowances including Full Expensing), and fixed furniture (may qualify for AIA). A professional surveyor's cost segregation report is often essential for large projects.

3. The Allowance Statement — Essential Documentation

When a building on which SBA has been claimed is sold, the Allowance Statement is a legally required document. Without it, the buyer cannot claim SBA for the remaining allowance period. The Allowance Statement must contain: the original qualifying construction cost, the date the building was first brought into qualifying use, and confirmation of the rate (3% or enhanced rate). The seller must provide this to the buyer on sale. HMRC requires the Allowance Statement to be produced in writing and retained. If a building changes hands multiple times, each buyer can only claim SBA based on the original construction cost — not the purchase price paid to a later seller. This can be a significant issue in commercial property transactions where the market value has increased above the original construction cost.

4. Enhanced 10% SBA Rate for Freeport and Investment Zone Properties

Businesses constructing or purchasing qualifying commercial buildings within a designated Freeport tax site or Investment Zone can claim SBA at 10% per annum instead of 3% — providing full relief in just 10 years instead of 33.3 years. This is available until September 2031 (Freeport sites) with possible extension. Current UK Freeport tax sites include: East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth & South Devon, Solent, Teesside, and Thames. Investment Zones also qualify. The enhanced rate applies to new construction contracts entered into from the date the tax site is designated, and the building must be brought into use within the qualifying period. The 10% rate is not available for renovation of existing buildings — only new-build within the designated zone.

5. SBA on Purchased Commercial Buildings

SBA is not just for businesses that construct buildings — it is also available to buyers of commercial property, provided the original construction contract was after 29 October 2018. When you buy a qualifying commercial building, you can claim 3% SBA on the original construction cost (not your purchase price) for the remaining years of the 33.3-year period. Example: a warehouse built in 2020 at a construction cost of £3 million is purchased by a new owner in 2026 for £4 million. The buyer can claim 3% × £3 million = £90,000 SBA per year for the remaining 27.3 years (from 2026, with full period ending in 2053). The buyer is not entitled to SBA based on the £4 million purchase price — only the original £3 million qualifying construction cost. Always request an Allowance Statement from the vendor.

6. Interaction with Capital Gains Tax on Sale

Unlike plant and machinery capital allowances, SBA does not give rise to a balancing charge when the building is sold. There is no clawback of SBA claimed. However, SBA indirectly affects the CGT calculation: SBA claimed does not reduce the base cost for CGT purposes. The CGT base cost remains the original acquisition cost (plus any capital expenditure not deducted as revenue or as capital allowances). This means that the SBA provides an income tax/corporation tax deduction without reducing the CGT base cost — potentially the best of both worlds from a tax efficiency perspective. For SDLT purposes, the purchase price (not the original construction cost) determines the SDLT charge. For commercial property, SDLT rates are 2% above £150,000 and 5% above £250,000.

7. SBA for Mixed-Use Buildings and Apportionment

Where a building has both qualifying non-residential and non-qualifying residential elements, the qualifying costs must be apportioned on a just and reasonable basis. Common scenarios: a building with ground floor retail (qualifies) and upper floor flats (does not qualify) — apportion by floor area or original construction cost. A hotel with staff accommodation — the staff accommodation element does not qualify. A care facility where some residents are in a "care home" (registered business) and others are in a "dwelling" arrangement — careful analysis needed. Apportionment should be agreed with your tax adviser and documented at the time of the transaction. HMRC has detailed guidance in the Capital Allowances Manual (CA81000 onwards) on what constitutes "just and reasonable" apportionment for SBA purposes.

Worked Examples: SBA 2026

Example 1: New Office Construction — £5m Cost

Qualifying construction cost (excluding land and P&M): £5,000,000
SBA rate: 3% per annum
Annual SBA allowance: £5,000,000 × 3% = £150,000
Annual CT saving at 25%: £150,000 × 25% = £37,500
Total SBA over 33.3 years: £5,000,000
Total CT saved over 33.3 years: 5,000,000 × 25% = £1,250,000

Example 2: Freeport Warehouse — £3m New Build

Qualifying cost: £3,000,000 (Teesside Freeport tax site)
Enhanced SBA rate: 10% per annum
Annual SBA: £3,000,000 × 10% = £300,000
Annual CT saving at 25%: £300,000 × 25% = £75,000
Full relief in: 10 years (versus 33.3 years at standard rate)
Comparison with standard 3%: annual saving of only £22,500 — Freeport rate is 3.3× better

Example 3: Building Sold After 10 Years — Buyer's SBA Position

Original construction cost: £2,000,000 (2020)
Seller claimed 10 years × 3% × £2m = £600,000 SBA
Unclaimed SBA at sale: £2,000,000 − £600,000 = £1,400,000
Buyer can claim: £2,000,000 × 3% = £60,000 per year for remaining 23.3 years
Buyer's total future relief: £1,400,000 at 3% p.a. on original cost
Note: buyer's SBA is based on original £2m construction cost, not the purchase price paid

Sources & Methodology

Disclaimer: This calculator provides estimates only. SBA claims require detailed cost segregation between qualifying and non-qualifying expenditure. Always consult a qualified tax adviser or chartered surveyor before making an SBA claim.

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Frequently Asked Questions — SBA

What is the Structures and Buildings Allowance?

SBA is a 3% annual straight-line capital allowance on qualifying non-residential building and structure costs, available for construction contracts entered into on or after 29 October 2018. It provides full tax relief over 33.3 years. Enhanced 10% rate available in Freeport/Investment Zone tax sites.

Can I claim SBA on a second-hand commercial building?

Yes, if the original construction contract was after 29 October 2018. You claim SBA based on the original construction cost (from the Allowance Statement provided by the vendor), at 3% per year for the remaining years of the 33.3-year period. SBA is based on the original cost, not your purchase price.

Does SBA apply to residential property?

No. SBA is specifically excluded for residential property of any kind, including houses, flats, HMOs, student accommodation, and care homes operated as dwellings. Only non-residential commercial property qualifies. Mixed-use buildings must apportion costs appropriately.

What is the Allowance Statement and why is it important?

The Allowance Statement is a written document provided by the seller to the buyer on disposal of a qualifying building. It must state the original qualifying construction cost and first use date. Without it, the buyer cannot claim SBA. It is a legal requirement for commercial property transactions involving SBA-qualifying buildings.

Is there a balancing charge when I sell an SBA building?

No. Unlike plant and machinery allowances, there is no balancing charge on sale. SBA claimed is not clawed back. The buyer simply inherits the remaining SBA based on the original construction cost. If the building is demolished, a balancing allowance for the unclaimed SBA may be available.

What is the 10% Freeport SBA rate and which areas qualify?

Buildings in designated Freeport or Investment Zone tax sites can claim 10% SBA per year, providing full relief in 10 years. Current Freeport tax sites include East Midlands Airport, Felixstowe and Harwich, Humber, Liverpool City Region, Plymouth and South Devon, Solent, Teesside, and Thames. The enhanced rate is available until at least September 2031.

Structures and Buildings Allowance (SBA) Calculator