Typical Capital Allowances for Construction project

The capital allowances available when building new commercial property depend on a range of factors including, for example, the type of property and its design/specification.

However, the following expenditure qualifying for tax relief would normally be expected as a % of the construction cost) :

Property Type	PMAs	IBAs
Offices:
Low to medium rise, not air conditioned	20% - 30%
Air conditioned	25% - 35%
Prestige air conditioned	30% - 45%
Fitting out landlord’s shell office	55% - 85%
Retail:
Shopping centres, enclosed	15% - 30%
Distribution warehouses	5% - 15%	sometimes
Fitting out landlord’s shell retail unit	55% - 85%
Hotels:
Provincial	30% - 45%	55% - 70%
Luxury city centre	35% - 50%	50% - 65%
Industrial:
Industrial units	1% - 5%	90% - 95%
B1 office/industrial units	5% - 20%	75% - 90%
Healthcare:
Hospitals	30% - 45%
Nursing homes	25% - 35%
Health centres/surgeries	25% - 35%
Other:
Bars & restaurants	20% - 50%
Fitting out landlord’s shell bar/restaurant	55% - 90%
Leisure centres & gyms	20% - 45%
Fitting out landlord’s shell gym	55% - 85%

Key:

PMAs = Plant & machinery allowances. Generally available at 25% p.a. reducing balance (with some exceptions).

For large companies 60% of the tax relief is obtained after three years and 90% after eight.

Small and medium size companies obtain the tax relief faster. Small companies obtain 72% after three years and 88% after six years. Medium sized companies obtain 63% after three years and 88% after seven years.

IBAs = Industrial buildings allowances (depending upon the use of the property). Available at 4% straight line over 25 years and often accelerated over a shorter period for purchased property.

Notes:

1. Capital allowances qualifying percentages for property purchases can sometimes be slightly lower (e.g. acquisition of second-hand land and buildings . Please see our separate qualifying percentage guide for purchased property.
2. The estimates provided above are not suitable for, or intended to be used for, making payments of tax or for preparing tax computations and filing tax returns, for which a appropriately qualified professional should be appointed to provide advice and prepare a capital allowances analysis. Please contact us to discuss carrying out this work.