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ACCA Applied Skills · Taxation (UK) · Property and investment income

Elaine bought a second-hand building from a builder on 1 July 2025 for £500,000, which was then brought into use for letting. The seller had not claimed any structures and buildings allowance and the original construction cost was £320,000 (excluding land), which cost is documented. The building was first used 4 years ago. Elaine's accounting date is 5 April. Which statement is correct about Elaine's structures and buildings allowance for 2025/26?

The allowance is £7,200. A purchaser of a used building claims the structures and buildings allowance on the original qualifying construction cost of £320,000, not the price paid. At 3% this is £9,600 a year, time-apportioned for nine months of ownership to £7,200.

  1. AThe allowance is based on the original qualifying construction cost of £320,000, and is time-apportioned for 9 months to give £7,200Correct
  2. BThe allowance is 3% of £500,000 time-apportioned, giving £11,250
  3. CThe allowance is 18% of £320,000 giving £57,600
  4. DNo allowance is available because the building was not newly constructed by Elaine

Explanation

On purchase of a used building the buyer takes over the original qualifying cost, here £320,000. 3% x £320,000 = £9,600 a year; 9 months (1 July 2025 to 5 April 2026) gives £7,200. Using the £500,000 price is wrong because the price includes land and uplift. 18% is the main pool rate.

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