New Capital Allowance for Commercial Buildings

A new 2% straight line tax deduction for the cost of construction or renovation of commercial buildings and structures was announced in the autumn 2018 Budget. HMRC have now issued a technical note setting out the details for the operation of this new relief.

Unlike the old Industrial Buildings Allowance the new relief is available for the construction of shops and offices as well as factories and warehouses.

The new tax break is available where a contract is entered into and construction costs are incurred on or after 29 October 2018. The allowance is available to commercial property landlords as well as trading businesses. There are special rules for leasehold buildings which determine whether the landlord or tenant is entitled to claim the allowance.

Note that there are more generous plant and machinery allowances available for fixtures and fittings within the building and we can work with you to help you maximise the tax relief available. For example, the new increased Annual Investment Allowance referred to in our previous blog means that there may be 100% capital allowances which can be claimed for equipment within buildings such as central heating and air conditioning.