Advanced Taxation (UK) · Capital gains tax and trusts

Capital Allowances, SBA and Stamp Taxes for ACCA ATX

Updated 11 October 2026

Capital allowances give tax relief for qualifying spending on plant and buildings. The annual investment allowance gives 100% relief up to £1,000,000. Structures and buildings allowance is 3% a year and is added back on sale. Non-residential SDLT is 0%, 2% and 5% by slice. Stamp duty on shares is 0.5%.

Understand Capital Gains Tax, Capital Allowances and Stamp Taxes Links

Capital allowances replace accounting depreciation for tax. Depreciation is added back to profit. Instead you deduct allowances on qualifying spending. On plant and machinery, the annual investment allowance (AIA) gives 100% relief on spending up to £1,000,000 for a 12-month period. The limit is reduced or increased pro rata if the period is shorter or longer than 12 months. Spending above the limit goes into the main pool (18% writing down) or the special rate pool (6%). Companies can also claim first year allowances: 100% on main pool and 50% on special rate pool expenditure. These apply only to qualifying new and unused plant and machinery, not to all spending that goes into the pools.

The structures and buildings allowance (SBA) gives straight line relief of 3% a year on the qualifying cost of a non-residential structure or building. Land cost and plant and machinery inside the building do not qualify. Relief runs from when the building is first brought into qualifying use.

The link to capital gains is on sale. When you sell a building on which SBA was claimed, you do not claim a balancing adjustment. Instead, the SBA claimed is deducted from the cost when you compute the gain. This makes the gain larger. How the buyer continues the allowances is not covered by the tax tables supplied, so follow the examinable documents and the facts in the question.

Stamp taxes are costs of the transaction. Stamp duty land tax (SDLT) on non-residential property is charged by slice: 0% up to £150,000, 2% from £150,001 to £250,000 and 5% above £250,000. The buyer pays. SDLT paid is part of the buyer's acquisition cost for a later gain. Stamp duty on shares is 0.5% and is paid by the buyer on a transfer of shares.

In the exam you must pick the right tax, use the tax tables, and show how each one changes the numbers. These topics often sit inside a larger case on a sale, purchase or business exit.

Key rules to remember

Annual investment allowance: AIA = 100% × qualifying spending, up to £1,000,000 for a 12-month period; The £1,000,000 limit is reduced or increased pro rata if the period is not 12 months. Any spending above the limit goes to the main or special rate pool. Set the AIA against special rate pool spending first. That spending would otherwise get only 6% writing down allowance, so using the AIA there gives the greatest benefit.
Writing down allowance rates: Main pool 18%; special rate pool 6%; Apply to the pool balance brought forward plus additions not covered by the AIA or first year allowance. Adjust for the length of the period.
Enhanced allowances for companies: Main pool first year allowance 100%; special rate pool first year allowance 50%; Only for companies, and only on qualifying new and unused plant and machinery. They do not apply to all pool spending. Check the question for the qualifying conditions it gives.
Structures and buildings allowance: SBA per year = 3% × qualifying cost; Straight line. Excludes land and plant and machinery. Time apportion in the first and last periods.
Effect of SBA on a gain: Gain = Proceeds − (Cost − SBA claimed) − other allowable costs; Reduces the cost. There is no balancing charge or allowance on sale.
SDLT on non-residential property: 0% on first £150,000; 2% on £150,001 to £250,000; 5% above £250,000; Charged by slice on the price. The buyer pays.
Stamp duty on shares: Stamp duty = 0.5% × consideration; Paid by the buyer. Check the rounding rule given in the question. Do not charge on gifts or on the seller.

How to solve Capital Gains Tax, Capital Allowances and Stamp Taxes Links questions

Use this order for any question that mixes allowances, gains and stamp taxes.

1Identify the transaction and who is the buyer and who is the seller.
2Split the cost or price into land, building structure, and plant and machinery. Only the structure qualifies for SBA.
3Work out allowances: AIA first, then first year allowances for companies, then writing down allowances at 18% or 6%. Time apportion if the period is not 12 months.
4Work out SBA at 3% on the qualifying cost for the time in use.
5For a sale of a building, deduct the SBA claimed from cost and compute the chargeable gain. Then apply the annual exempt amount and rates, or reliefs.
6Compute SDLT by slice for property, or 0.5% for shares. Add the buyer's SDLT to the buyer's acquisition cost.
7State the effect on each person and on cash flow. Keep all workings visible.

Quickest way: Three-line check for property and share deals

When to use it: Use when the question gives a purchase or sale price and asks for tax effects fast.

Write SDLT: 2% × ((lower of price and £250,000) − £150,000), plus 5% × (price − £250,000) if the price is above £250,000. Zero if the price is £150,000 or less.
Write SBA: 3% × qualifying structure cost, then total claimed to the sale date. Deduct from cost for the gain.
Write stamp duty: 0.5% × share price for the buyer. Then check which person bears each cost.

Common mistakes in Capital Gains Tax, Capital Allowances and Stamp Taxes Links

Charging SDLT on the whole price at one rate.
Students confuse slice rates with a single rate.
Fix: Apply 0%, 2% and 5% to each slice only. Add them up.
Claiming SBA on the land or on plant inside the building.
The whole purchase price looks like the building cost.
Fix: Strip out land and plant first. Plant goes to the AIA or the pools.
Using a balancing charge for SBA on sale.
Mixing it up with plant and machinery.
Fix: For SBA, deduct the allowances claimed from cost when computing the gain.
Putting stamp duty on shares on the seller.
Students think all sale costs fall on the seller.
Fix: The buyer pays stamp duty at 0.5%. It is part of the buyer's cost.
Not time-apportioning AIA or writing down allowances, and ignoring the £1,000,000 limit.
Rushing and not reading the period length.
Fix: Check the period length before you start. If the period is not 12 months, reduce or increase the £1,000,000 AIA limit pro rata and adjust the writing down allowances for the length of the period. Apportion to the nearest month.
Forgetting SDLT paid is an allowable cost for the buyer's later gain.
Treating SDLT as a pure expense.
Fix: Add SDLT to the base cost of the property for a later disposal.

Worked examples

Example 1

A company buys a new non-residential building for £600,000 (land £100,000, qualifying structure £400,000, plant £100,000). The £100,000 is qualifying plant and machinery and is included in the £600,000 price. The company also spends a further £50,000 on qualifying main pool plant. This £50,000 is separate from the £600,000 purchase price and is not part of the SDLT base. Its year is 12 months and it has no other spending. The company claims the AIA rather than the first year allowance. Compute SDLT on the £600,000 purchase, the SBA for the first full year and the AIA claim.

Show the solution

SDLT is on the £600,000 purchase price only. The separate £50,000 of plant is not included.
First £150,000 at 0% = £0.
Next £100,000 (£150,001 to £250,000) at 2% = £2,000.
Remaining £350,000 (£250,001 to £600,000) at 5% = £17,500.
Total SDLT = £2,000 + £17,500 = £19,500.
SBA: 3% × £400,000 = £12,000. Land and plant do not qualify.
Plant and machinery spending = £100,000 (inside the building price) + £50,000 (separate purchase) = £150,000. Both amounts are qualifying plant and machinery. The total is under £1,000,000.
AIA = 100% × £150,000 = £150,000. The main pool first year allowance is also 100%, so either claim gives the same £150,000 of relief here. The AIA can be claimed on any qualifying plant, whereas first year allowances need qualifying new and unused plant. First year allowances are not limited to £1,000,000, which matters only if spending exceeds that limit.

Answer: SDLT is £19,500, SBA is £12,000 a year and the allowance on plant is £150,000 (the same under the AIA or the 100% first year allowance), so no balance goes into the pools.

Example 2

Sam sells a non-residential building for £700,000. He bought it for £450,000 and the qualifying cost for SBA was £350,000. He claimed SBA for 4 full years. Compute the chargeable gain before the annual exempt amount.

Show the solution

SBA per year = 3% × £350,000 = £10,500.
SBA claimed over 4 years = 4 × £10,500 = £42,000.
Adjusted cost = £450,000 − £42,000 = £408,000.
Gain = £700,000 − £408,000 = £292,000.

Answer: The chargeable gain is £292,000. Without the SBA adjustment it would be £250,000.

Exam tips

Read the question for who is buying and who is selling before you pick a tax. SDLT and stamp duty fall on the buyer.
Show the slice workings for SDLT in a short table-like list of lines. Markers award marks per slice.
Always state that SBA is clawed back through the gain and not through a balancing adjustment.
Say which pool the AIA should be set against first and why: the special rate pool, because that spending would otherwise get only 6% writing down allowance, so the AIA gives the greatest benefit there.
Use the tax tables given in the exam. Do not memorise from outside rates. Quote the rate you use.

Practice questions from Capital gains tax and trusts

Capital Gains Tax, Capital Allowances and Stamp Taxes Links: frequently asked questions

What are the non-residential SDLT rates for ATX-UK?

They are 0% up to £150,000, 2% from £150,001 to £250,000 and 5% above £250,000. The rate applies only to the slice of the price in each band.

When is stamp duty on shares at 0.5% payable?

It is payable by the buyer on a transfer of shares, at 0.5% of the consideration. You take the rate from the tax tables in the exam.

How does SBA affect capital gains on sale?

SBA claimed is deducted from the cost of the building when you compute the gain. This increases the gain. There is no balancing adjustment for SBA.

What is the AIA limit?

The AIA gives 100% relief on qualifying plant and machinery spending up to £1,000,000. Spending above this goes into the main or special rate pool.