capital allowance or expences

[salavan]

hi another tax question if anyone can help

i just had a more economical gas boiler and upgraded the heating system in my house which i rent out after the tennant complained of high heating bills.

because it involved some electrical work i thought i had better get the electricals checked, it failed on everything and was considered dangerous so i had the house completely rewired. I also had some part double glazing instaled,

the cost of all combined was 6,000 pounds,

i was wondering if any of this can be claimed as a tax allowance or capital allowance, or whether it is considered by the tax office as an improvement.

most of it was done for energy saving, apart from the elecrical which may have had to be done by law. (im not sure)

thanks.

[Richlist]

There's not really enough information to be able to give you a definitive answer.

i just had a more economical gas boiler and upgraded the heating system in my house which i rent out after the tennant complained of high heating bills.

An upgrade is usually considered to be capital expenditure.

A straight forward boiler change.....to current regulations ie a condensing boiler ilo a standard boiler .....is not a considered to be an upgrade by HMRC and is usually revenue expenditure.

Spending £000's because a tenant has high bills isn't always a good business decision.

because it involved some electrical work i thought i had better get the electricals checked, it failed on everything and was considered dangerous so i had the house completely rewired.

A like for like rewire is revenue provided there was no element of improvement. If there was improvement eg extra sockets the whole works become capital expenditure.

I also had some part double glazing instaled,

That would be revenue.

the cost of all combined was 6,000 pounds,

The cost of the work is immaterial from a tax perspective.

[Chestnut]

Possibly misleading post removed

[Richlist]

Chestnut's answer is THE classic reason why you should NOT rely on a reply from an internet forum.

Almost EVERY aspect of his answer is WRONG.

Why not make a judgement to split replacement costs and improvement costs?

Because there are only definitive answers and its up to the taxpayer to identify the answers. Taking a guess when there is clear cut guidance from HMRC is not acceptable.

Chestnut's approach is likely to result in the OP receiving a rather large tax bill + interest at some point in the future should the tax office investigate his tax affairs and discover the mistakes. Its not recommended.

If boiler over, say, 15 years old the new one could be considered as replacement to current regs. Same with rusty radiators and pipework but less any additions/extensions to system.

Ditto electrics - as old has 'failed' rewire is replacement to current regs. - less costs of any added features, extra sockets etc.

It really doesn't work like that.

If the work that is carried out has a element of improvement then the whole job becomes capital expenditure.

Double glazing would be a capital improvement I think, unless old windows rotten and needed replacing to any current regs.

Totally wrong. HMRC now accept replacing single glazed windows & doors with double glazed units as revenue expenditure and not capital.

This is just an opinion, not a definitive answer - HMRC could only provide that!

If you don't know it might be better not to comment. I don't see how your post is at all helpfull to anyone.

[Chestnut]

Ouch!

Yes, agree I'm wrong to suggest making judgements when definitive advice is available.

I've just read HMRC PIM2020 - is that the definitive reference, Richlist?

Richlist states: If the work that is carried out has a element of improvement then the whole job becomes capital expenditure.

From above document I'm not so sure.....

Good news about double glazing! I was quite wrong there. Thanks!

[Richlist]

I've no idea what the correct HMRC reference document number is and can't be bothered to look.

I only seek to point people in the right direction.

Anyone with a tax query can:

1. Call their tax office for advice.

2. Search the HMRC and other web sites.

3. Employ an accountant.

4. Buy/ read a good book giving tax advice......I usually recommend Car Bayley's 'How to Avoid Property ' @ around £25.

I've never really understood why people who pay 20% tax actually want to offset the cost against income tax......saving themselves just the 20% when they ca wait a while and get almost double the savings against capital gains tax!

[Melboy]

I've never really understood why people who pay 20% tax actually want to offset the cost against income tax......saving themselves just the 20% when they ca wait a while and get almost double the savings against capital gains tax!

Because some people, including me, want to "Gift" the property to children & G/children under the 7 year rule for passing assets over. I have done this for 1 property already rather than just sell it.

It is unlikely that this tax ruling will ever change because too many politicians would shoot themselves in the foot if they were to pass a new tax law denying gift transfer.

[Richlist]

Yes I agree......but the emphasis of your post should be on the word 'some'.

Its my opinion that people like yourself make up just a small proportion of the total of those who think getting an offset against their income tax is somehow prefferable to an offset against CGT.