CH 13 - Structures and Buildings Allowance Flashcards
WHICH BUILDINGS QUALIFY FOR THE SBA?
- New buildings and structures
- Renovation/conversion of an existing building
where construction takes place on/after 29 October 2018
AND
the building is used for a non-residential purpose (eg office, shop, warehouse, factory etc).
CAA 2001, s.270AA
HOW IS THE SBA CALCULATED?
Qualifying expenditure × 3% per annum
(time apportined)
What includes
QUALIFYING EXPENDITURE
for SBA
Includes;
* Constraction costs,
* and preparation costs
* demolition costs
while excludes
- cost of land
- leagal fees, stamp duty land tax
- cost of planning permission
- P&M such as integral features
What is qualifying cost for SBA relief,
when purchased from non-developer?
When a building is purchased unused from someone other than a developer, then;
lower of;
- the price paid for the building (ex.land)
&
- the qualifying construction costs;
will qualify for relief.
When a purchase price for qualifying building is eligible for the SBA?
When purchased an unused building from a developer.
must be split between land and actual building & only tprice relating to the building will be eligible for the SBA
How SBA charge is adjusted on an additional VAT liablity or rebate?
The qualifying expenditure is adjusted
at the begning of chargeable period
in which an additional liablity or rebate occurs.
When SBA is given from which date?
later of;
- the date the expenditure is incurred,
- the date the building (or structure) is first brought into business use
What an owner of building (structure)
NEEDS TO OBTAIN to be able to claim SBA?
Allowance Statment
prepared by the person who carried our the construction & sets out the;
* date of contract for construction,
* the amount of qualifying expenditure
* and the date on which the building ws first brought into use.
When SBA can no longer be claimed?
if the building starts to be used for residential purposes
(allowances is proportionately reduced for the period in which residential use occurs)
CAA2001, ss.270AA(2)
Can SBA be used when building is partially used for business & residential purposes?
Yes , given the proportion of qualifying expenditures is calculated on a just and reasonable basis.
however is the business use is insegnificant no allowance will be allowed; e.g. use of dwelling for business proposes
When was SBA at 2% p.a.
prior to 6.4.2020 (1.1.2020 for companies)
strudling years needs to be aproportioned on 2% & 3%
When there is a shortfall in allowances claimed & can it be claimed?
Arises when % of SBA was 2% on acc.period straddled 6.4.2020.
Can be claimed in the final chargeable period given the claimant is the person who owned it in April 2020.
CAA 2001, s270GD
Under Leases
who can claim SBA?
for leases:
<35 years its leasor is entitled to SBA
> 35 years & MV of interest in property retained by lessor is less than 1/3 of the premium paid for the lease is the lessee entitled to SBA
<50 yeras , the amount of the premium taken into account for this calculation is the amount subject to CGT.
What is FREEPORTS.
available for structures and buildings in area designated by HMRC
similar to SBA but given at annual relief of 10%
for freeport qualifying expenditure
