From a Capital Allowances perspective there have been no surprises. 

Structures and Buildings Allowances  

Starting with the good news, as widely expected the Structures and Buildings Allowance (SBA) will increase from 2% to 3%. 

SBAs are allowances that can be claimed by taxpayers that incur qualifying expenditure on the construction, renovation or refurbishment of a non-residential structure or building.  

From 1 April 2020 for corporation tax and 6 April 2020 for income tax, SBAs may be claimed at an increased annual allowance of 3%. Some miscellaneous amendments to the legislation have also been made to ensure the this relatively new legislation operates as intended. 

From the operative date, all taxpayers that bring into qualifying use a non-residential structure or building, where all the contracts for construction works were entered into on or after 29 October 2018, will be able to claim the new rate of 3% per year. 

In addition, for taxpayers that were entitled to claim the SBA for structures or buildings that were brought into use between 29 October 2018 and 1 April 2020, for corporation tax, or 6 April 2020, for income tax, can claim the new 3% rate from the operative date. 

Enhanced Capital Allowances in Enterprise zones

Enhanced Capital Allowances will continue to be available for companies investing in new plant or machinery for use in designated assisted areas within enterprise zones. 

This measure ensures that the 100% first year capital allowance will remain available for expenditure incurred in relation to all areas, whenever designated, until at least 31 March 2021. 

Enhanced Capital Allowances on Energy and water Efficient Technologies

Very disapointingly, the Government has not provided any clarity on what will replace the Enhanced Capital Allowances (ECA) scheme due to be withdrawn in less than a month’s time in April 2020. 

The withdrawal of the ECA scheme is at odds with the Government’s commitment to a net zero carbon emissions target. The Government must still recognise that a replacement ECA scheme should be made a priority in order to support the commercial property sector in meeting the net zero carbon emission target. 

We will of course continue to encourage our clients to specify energy and water efficient technologies when refurbishing or constructing commercial buildings, however, this may be less likely without the incentive of ECAs.