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ACCA Strategic Professional · Advanced Taxation (UK) · Income tax: income from self-employment

Ravi, a sole trader, constructs a new commercial building for use in his trade at a qualifying cost of £400,000 (excluding land). The building is brought into use on the first day of his accounting period, which is 12 months long. What structures and buildings allowance (SBA) can Ravi claim for that period?

Ravi can claim £12,000. The structures and buildings allowance is a straight line allowance of 3% a year on qualifying construction cost, excluding land, so 3% of £400,000 gives £12,000 for a full 12-month period of use.

  1. A£12,000Correct
  2. B£24,000
  3. C£72,000
  4. D£400,000

Explanation

SBA is a straight line allowance at 3% a year on qualifying construction cost. £400,000 x 3% = £12,000. The £72,000 option wrongly applies the 18% main pool writing down allowance, and £24,000 wrongly uses a 6% rate.

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