Corporation Tax: A reminder about the Annual Investment Allowance and the Structures and Buildings Allowance

by | Jan 19, 2023

Annual Investment Allowance

Following the mini-Budget 2022, the Annual Investment Allowance (AIA) will remain at £1 million for the foreseeable future.

It is always useful to review your capital expenditure prior to your company’s year end to see if there is benefit in accelerating the commitment to any expenditure.


Structures and Buildings Allowance 

The allowance applies to expenditure incurred on new non-residential structures and buildings intended for commercial use. The cost of works to bring structures and buildings into existence (i.e., construction costs) and to improve existing structures and buildings (i.e., refurbishment costs) are eligible, as well as the costs of conversion of a building for use in a qualifying activity. HMRC’s guidance on SBA’s is really helpful and provides examples of the costs you can claim the allowance on and, probably more useful, what you cannot claim the allowance on.

Unlike expenditure on plant and machinery, SBA does not qualify for the Annual Investment Allowance.

The SBA is available at a rate of 3% per annum (previously 2%) on a straight-line basis, over a fixed 33⅓ year (previously 50 year) period, starting from when the structure or building comes into qualifying use.  As announced in the mini-Budget 2022, enhanced SBA’s at the rate of 20% are also expected to be available in the governments newly created Investment Zones in due course.

A tax review of any major capital expenditure project can ensure maximum reliefs are claimed.

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