claim tax back on roof

berty4

my uncle rects out his flat and the roof has to be replaced or major repair and his cost is £5000 can he claim it against his tax

talkinpeace

he can claim it against the income from the flat, not against his other tax (depending on many factors)

nomunnofun

Taking into account the words 'major repair' and 'replaced' it would appear that there is likely to be a significant improvement in the asset beyond its original condition. I would be disagreeing that the cost could be claimed against the income of the flat having designated it capital as opposed to revenue expenditure.

http://www.hmrc.gov.uk/manuals/pimmanual/pim2020.htm

This thread and, in particular, the input by jimmo may also prove helpful:

https://forums.moneysavingexpert.com/discussion/4447233

chrismac1

oI would give the standard answer of "it depends". Quoting two extremes from my own client base:

1. Client 1 has been renting out their second property for over 10 years. Due to wind damage the roof was leaking, tenant understandably peeved. Rush repairs done, tenant happy. Cost claimed against the rentals, happy to defend this to the European Court of Justice if necessary.

2. Client 2 converted a former water board substation into a high grade camping barn. Much work was done, some of this in my view claimable as plant. Some of the work involved major structural repairs, including a new roof. The old roof had holes in it and was clearly not suitable for anything other than possibly base jumping. He had bought it in that condition. My advice on this roof, and similar alterations to the fabric of the building, was that no way should we claim this other than as a capital enhancement, client was fine with this.

90% of such repairs and alterations fall in the "grey area" between these two extremes. That is when you advise the client on options, give him or her an assessment of the "HMRC risk" together with the case for our defence if it should come to that, and let the client decide.

martinsurrey

nomunnofun wrote: »

Taking into account the words 'major repair' and 'replaced' it would appear that there is likely to be a significant improvement in the asset beyond its original condition. I would be disagreeing that the cost could be claimed against the income of the flat having designated it capital as opposed to revenue expenditure.

http://www.hmrc.gov.uk/manuals/pimmanual/pim2020.htm

This thread and, in particular, the input by jimmo may also prove helpful:

https://forums.moneysavingexpert.com/discussion/4447233

Your own link contradicts you.

As the house was in a habitable condition when it was originally let. The following paragraph comes in


"Repairs to reinstate a worn or dilapidated asset are usually deductible as revenue expenditure. The mere fact that the taxpayer bought the asset not long before the repairs are made does not in itself make the repair a capital expense. But a change of ownership combined with one or more additional factors may mean the expenditure is capital. Examples of such factors are:
· A property acquired that wasn’t in a fit state for use in the business until the repairs had been carried out or that couldn’t continue to be let without repairs being made shortly after acquisition. "

so as the property was in a habitable state before the repairs became necessary or needed, the whole cost can be treat as a repair and set rental profit IMO.

Of course if we find out the flat was bought 2 weeks before the roof gave in the above changes.

But i assume the rental has been going on for some time and the flat was purchased without any know roof issues.

jimmo

chrismac1 wrote: »

I would give the standard answer of "it depends".

So would I.

Also, particularly in the case of purpose built flats, this could well be routine maintenance or emergency repairs for which the sinking fund has insufficient funds, more likely to be allowable than not.

However, without details, who knows?

nomunnofun

martinsurrey wrote: »

Your own link contradicts you.

As the house was in a habitable condition when it was originally let. The following paragraph comes in


"Repairs to reinstate a worn or dilapidated asset are usually deductible as revenue expenditure. The mere fact that the taxpayer bought the asset not long before the repairs are made does not in itself make the repair a capital expense. But a change of ownership combined with one or more additional factors may mean the expenditure is capital. Examples of such factors are:
· A property acquired that wasn’t in a fit state for use in the business until the repairs had been carried out or that couldn’t continue to be let without repairs being made shortly after acquisition. "

so as the property was in a habitable state before the repairs became necessary or needed, the whole cost can be treat as a repair and set rental profit IMO.

Of course if we find out the flat was bought 2 weeks before the roof gave in the above changes.

But i assume the rental has been going on for some time and the flat was purchased without any know roof issues.

I would beg to differ - the tenure of that particular paragraph is to highlight the fact that the recent purchase of a property before repairs does not automatically render those repairs capital expenditure. To use it in isolation is incorrect. In my opinion it is not intended to address the issue of the categorisation of any major repair, but to remove the automatic assumption that a recent purchase disqualifies the expenditure from being treated as revenue.

The issue is whether the replacement or 'major repair' to the roof is capital. The one paragraph that you have chosen does not address this issue which, without further details, remains open to debate as others have said.

In the part that I have highlighted you appear to be suggesting that all repairs are revenue expenditure simply because the property was habitable before they were carried out - this, in my opinion, cannot be correct.

chrismac1

In my view this is a grey area of UK tax law, which like all grey areas, is an opportunity.

In response to a short 2 line query we'll soon be on to 2 pages of replies at this rate. Grey area m'lud, I rest my case.

John_Pierpoint

Beware of buildings regulation approval - a new roof may be required to reach modern levels of insulation.

Future tenants should get a better EPC