Capital expenditure for property businesses
10/04/2019

There are different rules which apply to different types of capital expenditure for a property business. One of the main areas to consider in deciding whether a repair is a deductible expense is whether it is revenue or capital. Capital expenditure cannot be deducted in computing the profits of a property business, however there are separate reliefs for some capital expenditure.

The cost of land and buildings is capital expenditure, this includes the cost of any new buildings erected after letting has started and any improvements. 

HMRC also list the following additional examples of capital expenses:

  • expenditure which adds to or improves the land or property; for example, converting a disused barn to a holiday home,
  • the cost of refurbishing or repairing a property bought in a derelict or run-down state,
  • expenditure on demolishing a derelict factory to clear space for a new office building; the cost of the new building,
  • the cost of building a car park next to a property that is let,
  • expenditure on a new access road to a property,
  • the cost of a new piece of land next to a property that is let.

In general repairs and trivial capital improvements (incidental to a repair) are usually categorised as revenue expenditure. However, the devil can be in the detail and careful consideration must be given to specific expenses. For example, alterations due to advancements in technology are generally treated as an allowable repair rather than an improvement such as replacing single glazing on windows with double glazing.


 

Blog

Latest News

On your e-bike
11/06/2019 - More...
The Cycling Minister, Michael Ellis, has

HMRC cancels penalties charged to 6,000 families
11/06/2019 - More...
The High Income Child Benefit Charge

HMRC blocks phone fraudsters
11/06/2019 - More...
Fraudsters have been blocked from using

Newsletter

With our newsletter, you automatically receive our latest news per e-mail and get access to the archive including advanced search options!

» Sign up for the newsletter
» Login 

Ask a Question



Invalid Input
Your name

Please type your full name.
Your email address

Invalid email address.
Enter the text to submit your question
Enter the text to submit your question

Invalid Input



Contact Information

Banbury Office:

+44 (0) 1295 688 287
This email address is being protected from spambots. You need JavaScript enabled to view it. This email address is being protected from spambots. You need JavaScript enabled to view it.


Birmingham Office:

+44 (0) 121 784 5818
This email address is being protected from spambots. You need JavaScript enabled to view it. This email address is being protected from spambots. You need JavaScript enabled to view it.


Cirencester Office:

+44 (0) 1285 655 955
This email address is being protected from spambots. You need JavaScript enabled to view it. This email address is being protected from spambots. You need JavaScript enabled to view it.


Leamington Spa Office:

+44 (0) 1926 431 143
This email address is being protected from spambots. You need JavaScript enabled to view it. This email address is being protected from spambots. You need JavaScript enabled to view it.


We are registered under ICAEW and have PI Insurance.