Help with tax return - claiming capital allowances for an acquired business

n141311

hello,

Last year I purchased a business excluding goodwill for GBP 400k. Since then, I have invested approximately GBP 100k of my own personal money to renovate the commercial property.

My accountant has advised me that the profit and loss for the business itself will be covered as part of the company tax return. However, my Q is whether it's possible for me to deduct the GBP 100k personal investment I made on my personal tax return to fund renovation work? e.g. via some kind of enterprise relief scheme or capital expense?

Does anyone know of any relevant schemes or boxes on the HMRC self assessment tax return where such investments can be recorded to reduce my overall personal tax bill from PAYE income?

anselld

Presumably the commercial property is owned by the business not by yourself personally? In which case the further £100k invested in rennovations is effectively a loan by you to the business and should be dealt with by your accountant alongside the £400k originally invested.

Pennywise

You claim tax relief on the allowable expenses that you've spent the money on, not the amount you've put in. A very subtle difference. If you've put in £100k which has been spent on allowable expenses or allowable capital allowances, then that's the claim against your profits on the tax return. If you've spent some or all of it on non-allowable things like property improvements, then you have to wait to get tax relief until you sell it as it's then a cost against eventual disposal proceeds. First step is for you to research what is and what isn't allowable for capital allowances. Your accountant is almost certainly the best person to sort this out for you. Tell them exactly what you've put into the business and exactly what it's been spent on - usually, that means doing some decent book-keeping, and let them prepare the accounts and tax returns based on that.