Budget 2018 - structures & buildings allowance - the impact for farmers

30th October 2018 by Jonathan Wingfield

For many years there has been no tax relief given on the construction or conversion of buildings.  For the agricultural industry this has had the effect of dissuading farmers from investing in sheds, grainstores, etc. as there was no tax relief available on the main structure (other than for qualifying plant and integral features).

The Chancellor’s 2018 Budget has announced that as from 29 October 2018, there will be a 2% allowance, on a straight-line basis. This means that the cost of the new building, renovation or new conversion, will be given tax relief over 50 years in equal instalments. Perhaps not as generous as the Annual Investment Allowance for plant and machinery, which gives full and instant tax relief, but still a welcome announcement.

This allowance may also sound familiar to some of you, and this is because it is very much like the old Agricultural Buildings Allowance, offering 4% on a straight-line basis, which was abolished many years ago. This time around there is one big difference, as there will be no balancing adjustments, if the building is sold. Simply the purchaser will inherit the balance available and obtain the tax relief i.e. you construct a building for £50,000, getting £1,000 a year tax deduction – you then sell after 20 years. The purchaser simply gets the £1,000 tax deduction for the remaining 30 years. Although there are no balancing adjustments, the capital that is subject to tax on a disposal will increase as the deduction for original cost against proceeds used to calculate the gain is reduced by the quantum of allowances claimed.

It must be noted that this relief will not apply to any buildings used as dwellings, so houses or any residential property do not qualify. More detail will be sure to come but it appears this is a step in the right direction.


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Jonathan Wingfield

Jonathan Wingfield

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