Tax reliefs for land and buildings
We asked our Head of Private Client, Gavin James about the lucrative, but often overlooked area of property taxatation, tax reliefs for land and buildings, this is what Gavin shared with us.
The UK tax system offers valuable capital allowances that go beyond mere timing benefits—providing real tax savings. While common allowances like the Annual Investment Allowance (AIA), First Year Allowance (FYA), and Writing Down Allowance (WDA) are well known, several lesser-used reliefs are often missed by property developers and construction businesses.
Tax reliefs for land and buildings – full expensing
As part of a package of measures designed to stimulate the economy after Covid the Government announced that certain capital items acquired by companies would qualify for either 100% relief or 50% relief on acquisition. This relief has now been made permanent. With the £1m Annual Investment Allowance also still available. Most OMB companies can now obtain full relief for capital items.
Capital Allowances on Buildings
Since April 2020, the Structures and Buildings Allowance (SBA) allows a 3% annual deduction over 33.33 years for:
- Constructing new commercial properties
- Renovating existing commercial buildings
- Incidental repair costs linked to such renovations
This relief applies to UK and overseas property businesses.
When commercial properties are bought or sold, capital allowances on fixtures (e.g., electrical systems, heating, lifts) are often overlooked. Sellers may miss out on unclaimed allowances, while buyers can benefit from tax deductions on written-down values—provided a Section 198 election is made.
Land Remediation Relief
This lesser-known but generous relief offers up to 150% deduction for costs related to land decontamination. Available to UK Corporation Taxpayers, it covers non-subsidised costs for employees, subcontractors, and materials used in removing contaminants like oil, gas, asbestos, arsenic, or Japanese knotweed.
Many eligible expenses are hidden under general ‘groundworks’ in early project stages. Collaborating with a quantity surveyor and tax advisor can help identify and maximise these claims.
We would always recommend that you seek professional advice before acting or refraining from acting. If you require assistance or advice in respect of property tax matters, the RPGCC tax team are here to help. You can contact us on 020 7870 9050 or email us and a member of our team will get back to you as soon as they are able.
