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

Tariq lets out a freehold commercial building to a tenant. He constructed it at a cost of £300,000 (excluding land) and it was brought into qualifying use on 1 October 2025. Tariq prepares accounts to 5 April each year. What is the structures and buildings allowance (SBA) available to Tariq for the tax year 2025/26?

The allowance is £4,500. The structures and buildings allowance is 3% straight-line on the £300,000 construction cost, giving £9,000 a year, which is time-apportioned for six months of qualifying use in 2025/26, so £9,000 x 6/12 equals £4,500.

  1. A£4,500Correct
  2. B£9,000
  3. C£5,400
  4. D£0

Explanation

SBA is a straight-line 3% of qualifying cost, here £300,000 x 3% = £9,000 a year. The building was in qualifying use for 6 months (1 October 2025 to 5 April 2026), so the allowance is £9,000 x 6/12 = £4,500. The £9,000 option ignores the part-year time apportionment.

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