UK - Commercial Property News February 2020

Commercial property is always a very newsworthy topic. Here is a roundup of the latest news (February 2020) concerning commercial property and investments in the UK, including the new tax relief on commercial buildings and structure in Ireland.

New tax relief for commercial structures and buildings in Ireland

It has long been a frustration of businesses that most capital expenditure on commercial premises didn’t benefit from any tax relief because the assets were not ‘machinery’ or ‘plant’ under tax law. Therefore, when the 2018 Budget unexpectedly announced plans to introduce a new capital allowance for certain costs incurred in purchasing, constructing or renovating commercial structures and buildings, to be known as the “Structures and Buildings Allowance” (SBA), this new relief was very much welcomed, reports The Irish News.

Capital allowances can be a useful tax relief for businesses which incur a lot of capital expenditure (for example on equipment, machinery or business vehicles), as the relief enables a business to deduct some or all of the value of the capital item from its profits before it pays tax. The aim of introducing the SBA is to support business investment in constructing new structures and buildings, and improving existing ones, as well as increasing the international competitiveness of the UK’s capital allowances system.

The legislation introducing the SBA came into force on July 5 last, and it applies retrospectively to all qualifying expenditure incurred under contracts entered into on or after the 2018 Budget that October.

The SBA provides an annual two per cent writing down allowance at a flat rate over a 50-year period on the costs of constructing, renovating or converting new commercial structures and buildings under contracts entered into on or after October 29 2018.

Unlike other capital allowances, the SBA is an annual flat rate based on qualifying expenditure (rather than being claimed on a reducing balance) and there will be no system of balancing charges or balancing allowances on a subsequent disposal of the building or structure. Any remaining years of the 50 year period will pass to a new purchaser if and when the building or structure is sold. The amount of SBA claimed by the vendor in respect of that building or structure will be added to the proceeds of sale when calculating its gain on the disposal of the asset.

Find out more here

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Hayven Property Tax is an independent commercial property tax consulting company who are experts in capital allowance claims for commercial properties.

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