New tax relief could help developers kick-start construction projects
PUBLISHED: 16:15 30 April 2019
Cash incentives might help developers bring forward their commercial projects, says Gemma Brindley, of Crowe
Taking advantage of a new property tax relief could help Gloucestershire developers bring forward construction projects.
That's according to Gemma Brindley, Tax Director in the Cheltenham office of national audit, tax, advisory and risk firm Crowe.
It comes after the Chancellor announced the creation of a new type of capital allowance called the Structures and Buildings Allowance (SBA) which gives 2% flat rate relief for 50 years on most non-residential buildings and structures.
The SBA has been seen by some as a reincarnation of the Industrial Buildings Allowances (IBA) rules which were abolished in 2011.
But there are key differences and there are no disposal adjustments where SBA is claimed and a purchaser will simply continue claiming 2% straight line relief of the 50-year period remaining.
Gemma said: “The Chancellor has addressed a long-standing grievance of business and developers that the fabric of the building did not benefit from any tax relief since the IBA was abolished.
“However, the new SBA addresses this and also brings the UK more into line with other competitor nations which have long had more generous allowances.
“Whether this has been a significant factor in foreign companies' investment decisions, given the current state of economic uncertainty, cannot be stated with any confidence, but any and all help on the financial and tax relief front is always to be welcomed.”
One issue for developers is that the SBA rules came into effect immediately from the Budget date of October 29 last year, but full regulations are still at a draft stage.
Gemma said: “SBA claims should be based on original construction cost of the qualifying structure or building and there is no minimum spend level.
“The cost of buying the land, or of obtaining planning permission, is not included but the full range of building works will qualify, including preparatory works specifically for the construction, such as demolition, site clearance and any alterations required to bring the land into use.”
She stressed that SBA claims can only be made when the construction or building is brought into use.
“Each separate structure and expenditure has its own 50 year tax life, so it is essential that qualifying expenditure is recorded, claimed and written off over the relevant 50 year period,” she added.
“We await the substantive legislation with interest, to see the small print, but in any project of this kind, SBA and other reliefs should not be viewed in isolation and professional advice should be taken before commissioning or starting any such project.”
Gemma Brindley is a Director of corporate tax specialising in property and construction, and also advising on R&D tax relief and Patent Box.
She is a regular speaker on corporate tax issues affecting the property and construction industry.
She is also treasurer of Constructing Excellence Gloucestershire Club, a regional hub of the Constructing Excellence South West and national Constructing Excellence organisation.