Structures and Buildings Allowance for Dental Practices: 3% a Year on Your Premises (and Why It Is Not AIA)

When a dental practice spends money on its premises, two completely different tax reliefs are in play, and it is easy to claim the wrong one or miss one entirely. The Annual Investment Allowance gives fast, full relief on plant and machinery. The Structures and Buildings Allowance gives slow, steady relief on the building itself. They are not the same allowance, they do not cover the same spend, and the rules that govern each are different. This guide is about the second one: the Structures and Buildings Allowance, what it covers on a dental practice, and why it is not the AIA.

The allowance that catches what AIA misses

The Annual Investment Allowance (AIA) gives 100% relief in the year of purchase on qualifying plant and machinery, up to £1 million a year. For a dental practice that covers chairs, X-ray units, autoclaves, compressors and the integral features wired into a fit-out. If you want the full picture on AIA and what counts as plant, our guide to the Annual Investment Allowance for dental practices is the place to start.

The problem is that the building itself is not plant. The walls, the floor slab, the roof, the structural shell, the construction works that turn an empty unit into a surgery: none of that is plant and machinery, so none of it gets AIA. Before 29 October 2018 that spend got no annual relief at all. The Structures and Buildings Allowance (SBA) is the separate relief that now picks up that building expenditure, at 3% a year. In one line: plant goes to AIA, structure goes to SBA. Get that line right and you stop trying to claim the wrong relief on the wrong spend.

SBA is not AIA: the four differences that matter

Because both are capital allowances on practice spend, dentists conflate them. They are different reliefs in four concrete ways.

• What they cover. SBA covers the building structure. AIA covers plant and machinery. The same pound of spend cannot get both, so the split between structure and plant decides which relief applies.
• The rate and speed. SBA is 3% a year over 33 and one third years. AIA is 100% in year one. AIA front-loads the relief, SBA drips it out over more than three decades.
• The cap. SBA has no annual limit. AIA is capped at £1 million a year. A large structural spend that would blow through the AIA cap if it were plant has no equivalent ceiling in SBA, it simply relieves at 3% a year however large it is.
• The paperwork. SBA requires a written allowance statement before you can claim, and that statement must pass to a buyer on a sale. AIA needs no such statement.

If you have landed here looking for relief on equipment rather than the building, you want the AIA page linked above, not this one. SBA will not help you on a dental chair. It helps you on the room the chair sits in.

What qualifies for SBA on a dental practice

SBA relieves the cost of constructing, converting or renovating a commercial building used in a qualifying activity. The dental trade is a qualifying activity, so the practice premises qualify in principle. The qualifying spend is the structural and construction expenditure:

• Construction and building works on new premises, including the structural shell, floors, walls, roof and partitions.
• Conversion of an existing building into a surgery, for example turning a retail unit or office into a clinical space.
• Renovation of the structure, where the work is capital rather than a revenue repair.
• Qualifying professional fees directly related to the construction, such as architect and design fees.

The test is whether the spend is on the building structure used in the trade. If it is, and the other conditions are met, it attracts SBA at 3% a year. If it is plant, integral features or land, it is outside SBA and belongs in a different regime.

What does not qualify: land, plant, and residential

Three carve-outs catch dentists out, because each is where spend either drops out of SBA entirely or has to go to a different relief.

• The cost of the land is excluded. Where you buy a plot and build, you strip out the land value and claim SBA only on the construction. The land cost gets no annual relief at all.
• Plant and integral features are excluded from SBA because they get their own allowances. The electrical system, cold and hot water, heating, air conditioning and ventilation are integral features that go in the special-rate pool at 6%; the chairs, X-ray and other equipment are main-pool plant. Putting any of these in SBA as well is double-counting. Sorting which pound is structure and which is plant is the apportionment that drives a fit-out, and it is the subject of the pool-split work that sits alongside this page.
• Residential parts are excluded. A flat above the surgery, or any residential element of mixed-use premises, does not qualify. You apportion and claim SBA only on the commercial part.

This carve-out is where money is both lost and over-claimed. Lost, when a dentist treats a whole construction project as land or as one undifferentiated number and never identifies the SBA element. Over-claimed, when the same integral features are put through both the special-rate pool and SBA.

The rate and the period: 3% straight-line over 33 and one third years

SBA is a flat 3% of the qualifying cost each year, calculated straight-line rather than on a reducing balance. The same 3% comes off every year. Over 33 and one third years, 3% a year recovers the full 100% of the qualifying cost. So £300,000 of qualifying structure gives £9,000 of relief a year, every year, for 33 and one third years.

Contrast that with AIA, which would relieve the entire qualifying amount in year one (up to the £1 million cap). The slow, steady SBA is the trade-off for the spend being structure rather than plant. It is still real relief, and on a large build the annual figure is meaningful, but it arrives over decades, not in one year. That difference is exactly why a careful split between structure and plant on a fit-out is worth real money: every pound that is genuinely plant gets AIA now rather than SBA over 33 years. The statutory home of SBA is CAA 2001 Part 2A.

The 29 October 2018 gateway

SBA only applies where the construction contract was entered into on or after 29 October 2018 (with the linked tests of when the building was first brought into use and when the expenditure was incurred). This date is a hard gateway. Premises built under a contract signed before 29 October 2018, with no qualifying post-2018 works, get no SBA on the original structure at all.

The practical consequence is that the date of the construction contract matters as much as the spend. An older building is not automatically shut out, because qualifying construction, conversion or renovation carried out under a new contract signed on or after 29 October 2018 does generate SBA on those new works, even where the original shell predates the regime. So a 1990s building given a major structural refurbishment in 2026 can carry SBA on the 2026 works while the original structure carries none.

The allowance statement: no statement, no claim

SBA carries a paperwork condition that AIA does not. To claim, you must hold a written allowance statement recording the qualifying cost and the date the building was first brought into use. No statement, no claim. This is not a formality you can reconstruct after the event without difficulty, it is the document the whole allowance hangs on.

The statement matters most on a sale. When premises carrying SBA are sold, the remaining allowance passes to the buyer, but only if the buyer obtains the seller's allowance statement. This is the SBA equivalent of the section 198 fixtures trap on a practice purchase: the relief is real, but it is lost to the buyer if the paperwork is not handed over. Treat the allowance statement the same way you treat the fixtures election, as a deal document to secure before completion, not an afterthought.

Buying premises with existing SBA: the statement passes to you

When you buy a building that is already within its SBA allowance period, the remaining 3% a year transfers to you for the rest of the 33 and one third years. If a building was first brought into use in 2020 with £180,000 of qualifying SBA cost, roughly six years of the allowance period have run by the time you buy it in 2026; you continue claiming 3% of £180,000, which is £5,400 a year, for the remaining 27 and one third years or so.

The condition is the allowance statement. Without the seller's statement you cannot pick up the claim, and a relief worth £5,400 a year for nearly three decades simply disappears. That makes obtaining the allowance statement a standard line on the financial due diligence checklist for a practice purchase, alongside the fixtures position and the contract novation.

SBA and the disposal interaction, kept light

One interaction to note without going deep: SBA you have claimed reduces the building's base cost for capital gains tax when you eventually sell. In effect the relief is partially clawed back through a larger capital gain rather than through a balancing charge in the income tax computation. Unlike plant and machinery, where a sale can trigger a balancing charge that claws back excess allowances directly in the income tax computation, SBA does not generate a balancing adjustment in that way; the adjustment runs through the capital gain instead.

This does not undo the value of SBA, because income tax or corporation tax relief now is generally worth more than the additional gain later, and the gain may itself attract relief on a practice sale. It is simply a figure to carry into the sale model rather than a reason not to claim. The point to take away is that SBA is worth having, but its effect on a future disposal should be modelled as part of the sale, not discovered at completion. The freehold-versus-lease and sale-planning detail sits in our guide to lease versus freehold practice premises.

Squat builds and major conversions: where SBA earns its keep

The classic SBA case for a dentist is a squat practice built or converted from scratch, or a major premises extension. These are large structural spends, often hundreds of thousands of pounds, that AIA cannot reach because they are not plant. SBA is the only relief that touches them. On a squat, the whole project breaks into three buckets: land (no relief), structure (SBA at 3%), and plant and integral features (AIA or the pools). The bigger the structural element, the more SBA matters, and the more a correct split is worth. Our comparison of squat versus existing practice purchases sets the wider tax picture around that decision.

Ownership matters here. SBA relief on the structure goes to the person who incurs the qualifying construction cost on a building they hold an interest in. A dentist who owns the freehold and builds out a squat claims SBA on the structure. A dentist who only leases a unit and fits it out is in a different position: they can still claim plant and machinery allowances on the equipment and integral features they install, but they do not own the structure and so do not claim SBA on the shell. So the same fit-out spend can produce a different SBA outcome depending on whether you hold the freehold or a lease, which is one more reason the freehold-versus-lease decision carries tax weight beyond the headline purchase price.

How SBA, the pools and the VAT Capital Goods Scheme sit on one refurbishment

A single large refurbishment can trigger three different regimes at once, under three different taxes:

• SBA on the building structure, at 3% a year, for income tax or corporation tax.
• Plant and machinery allowances on the chairs, equipment and integral features, through AIA, the 40% first-year allowance, full expensing (for companies) or the pools.
• A VAT Capital Goods Scheme item, where a partially exempt practice spends £250,000 or more (VAT-exclusive) on land or a building, spreading input VAT recovery over ten years.

One spend, three regimes, three taxes, and three sets of paperwork. The point is not to master all three at once but to recognise that a big refurbishment is not a single tax event. Each regime claims its own slice of the project, and missing any one of them leaves relief on the table.

How SBA works on the numbers: three worked examples

These illustrate the mechanics. They are tagged to our locked house position on capital allowances (§7), use the current SBA rate of 3% and the £1 million AIA, and are not a substitute for advice on a specific project.

Example A: a squat build split between SBA and the plant pools

A dentist builds out a squat practice in 2026/27 for £400,000 (VAT-exclusive), having bought the land separately for £150,000. The apportionment is: building structure (shell, partitions, construction works, qualifying professional fees) £230,000; plant and integral features (chairs, X-ray, electrical, water, heating, ventilation) £170,000. The £170,000 of plant goes to AIA, giving 100% relief now (directed at the 6% integral features first). The £230,000 of structure gets SBA at 3%, which is £6,900 a year for 33 and one third years. The £150,000 of land gets nothing. One project, three outcomes, set by the split. (Tagged 2026/27, §7.)

Example B: SBA versus AIA on the same £230,000, to show the trade-off

Take the same £230,000 of structure from Example A. As SBA, it relieves £6,900 a year. Over the first five years that is £34,500 of relief. If that same £230,000 could somehow be plant (it cannot, it is structure), AIA would have relieved the whole £230,000 in year one. That gap, £230,000 of relief now versus £34,500 over five years, is the cost of the spend being structure rather than plant. It is also the reason a correct pool-split that maximises what is genuinely plant is worth real money: every pound moved from the SBA bucket into a legitimate plant pool accelerates the relief by decades. (Tagged 2026/27, §7.)

Example C: buying premises mid-SBA-period

A buyer acquires a practice freehold in 2026. The structure was built in 2020 with £180,000 of qualifying SBA cost, so roughly six of the 33 and one third years have already run. The buyer obtains the seller's allowance statement and continues claiming 3% of £180,000, which is £5,400 a year, for the remaining 27 and one third years or so. Without the allowance statement, the buyer claims nothing and the relief is gone. The whole outcome turns on one document changing hands at completion. (Tagged built 2020, bought 2026, §7.)

How this plays out in practice

A dentist had built out a squat and treated the entire spend as one number for tax, claiming capital allowances on the lot. Part of it was genuine plant that should have had AIA, part was structure that should have had SBA, and part was land that should have had neither. The claim was both wrong in its make-up and missing its SBA element entirely, with no allowance statement in place. The fix was to apportion the spend properly: plant into AIA for immediate 100% relief, structure into SBA at 3% a year, and the land stripped out. We prepared the allowance statement so the SBA was secure and would pass to any future buyer. The relief was the same project, correctly allocated, with each pound in the right regime and the paperwork in place for a later sale.

Common errors

• Claiming AIA on the building structure. The shell is not plant. AIA does not apply to it, SBA does.
• Missing SBA entirely on a post-2018 build or conversion. A qualifying construction project under a contract signed on or after 29 October 2018 generates SBA. Not identifying it forfeits 3% a year for decades.
• Failing to obtain the allowance statement on a purchase. No statement, no claim. The buyer loses the remaining allowance.
• Double-counting integral features. The same electrical, water, heating or ventilation spend cannot sit in both the special-rate pool and SBA.
• Forgetting the land is excluded. Land cost gets no annual relief and must be stripped out before the SBA calculation.

Where SBA fits in the wider capital-allowances picture

SBA is one piece of a larger relief map. On a fit-out, the plant pools and SBA together cover the whole spend: plant for fast AIA relief, structure for slow SBA relief, land for none. On a purchase, the section 198 fixtures election and the SBA allowance statement are the two pieces of paperwork that decide whether the buyer keeps the reliefs. And when you time a large equipment purchase, the AIA timing rules decide which year the plant relief lands in. The right approach treats premises spend not as one capital allowances question but as a structured split, with each part directed to the relief that fits it. If you are planning a build, a conversion or a major refurbishment, modelling the structure, plant and land split before the spend, and securing the allowance statement, is where the value is protected.