Claiming for capital improvement expenditure against capital gain (few receipts)

UKSBD

I've owned a property for 32 years which I did a lot of work on over the years.

Mainly a renovation in 1994 and further changes in 2014.

I do have some receipts/paperwork but not all.

Highlighting work done and timing of work done in to an AI system it has come up with a figure of £12,975 (this is a conservative figure and based on receipts I do have is lower than I would have paid)

The AI system also provided a recommended capital gains disclosure note;

"Capital improvement expenses total £12,975 and are based on recreated estimates due to a 32-year time lapse.

The property underwent a major initial renovation in 1994, which included a professional rewire (£1,250), full professional replastering (£1,400), an entirely new additional bathroom (£1,050), and structural pitched roof timber/weatherproofing materials purchased on a DIY basis (£165).

Concurrently in 1994, a professional heating engineer installed a complete oil central heating system infrastructure from scratch, including a 1,000L external storage tank, 7 radiators with TRVs, and loft header tanks (£2,700).

In 1995, a new kitchen layout was created (£2,400) alongside a kitchen flat roof (£510). This kitchen space previously possessed no fitted units or counters, containing only a standalone Belfast bowl with an over-sink electric water heater; the 1995 project fundamentally upgraded the asset's infrastructure with fully fitted units, worktops, an integrated cooker, and an extractor system, and was professionally installed apart from DIY tiling.

In 2014, the kitchen flat roof area was structurally upgraded to introduce modern PIR thermal insulation (£850).

Concurrently in 2014, the 1994 oil infrastructure was completely decommissioned and converted into a modern electric boiler system alongside a core consumer unit upgrade completed by professional contractors (£2,650). All standard maintenance items and personal DIY labour time have been strictly excluded from this capital claim."

Does anyone here have experience of providing estimates for work carried out and do you think HMRC will accept the above?

I did do a lot more work too, but only claiming for the major work

Note: there will be other things too, like purchase costs (I have receipts for this £550) and sales costs (not yet known)

I moved to new main residence in 2015, looking at selling original property shortly

Isthisforreal99

My first piece of advice would be to stop using AI for tax advice. If you are unsure of what you can claim for then get some professional advice. It coukd save you money in the long run.

The key point with capital expenditure is it must add value and not just be routine maintenance or like foe like replacement. In days gone by installing double glazing counted but no longer as that is the norm. So what value did the rewire add for example. HMRC's argument may be that that ia juat bringing it up to expected standarda. Replastering may be deemed to be normal maintenance. A new bathroom is unlikely to be seen as capital expenditure.

sherlock228

so what is the history of the property?
purchased in the early 90s in need of "renovation"?
lived in as main home until 2015, what happened to it since then?

I echo the comments of the person above, works that old do not sound like capital improvements, they sound like repairs done on a property to bring it into use as the main home.
For example, was the bathroom in 2015 the one installed in the 90s? You cannot claim for stuff that no longer exists
Was there an increase in the size of the kitchen roof? New roof sounds like a repair if not and had the property been let then the "new" kitchen would unquestionably be a repair, not capital

is the oil fired still the only central heating system or has it subsequently been replaced by something more modern?

BIM46911 - Specific deductions: repairs and renewals: what is a repair: the ‘entirety’: examples - HMRC internal manual - GOV.UK

Keep_pedalling

These sound like the sort of maintenance costs you would have for a property for that length of time. If this is a rental property did you not offset those costs against rental income at the time?

UKSBD

https://forums.moneysavingexpert.com/discussion/comment/82043146#Comment_82043146

Purchased in 1994 completely derelict, had been empty for 12 month, prior to that, old farm labourer was effectively living in one downstairs room.

Main roof was caving in, had to be taken off to wall plate and new roof put on (rafters not just covering)

Flat roof on back 1900's extension was also caved in, this was a sort of kitchen, basically a Belfast bowl on a brick stand with electric water heater above, no other units, not even a cooker if I remember rightly.

Whole room was gutted, flat roof taken off and new one put on (not a warm roof though, hence redoing it 20 years later)

Only form of heating was two open fire downstairs and two upstairs, strongly suspect it was 2 farm labourers cottages originally.

Upstairs had a bathroom which was basically unusable, this was stripped out and new bathroom located in a different room

No internal plastering (apart from ceilings, which were taken down), just painted bare stonework and brickwork, flagstone floors downstairs.

Very basic electrics, just surface mounted cables to a socket in each room and light in each room.
This was completely stripped out new fuse board and proper wiring installed

I don't know if you can picture it from my description, it was probably worse than how I describe it.

It was just a shell (worse than a shell as roof was caving in)

I basically had new roof put on, all internal walls insulated, dry lined and plastered, new floors, totally rewired, oil heating system installed, new stud walls put in upstairs to create bathroom in different location, new bathroom, 1900's extension gutted, new flat roof, dry lined, plastered, fitted kitchen

Lived in it for 20 year.

By 2014 the flat roof was getting tatty, boiler had packed up and newer regs meant I couldn't have oil again, nowhere to site tank that was compliant.

stripped out oil boilers cylinder and tanks and replaced with electric heating.

Rather than just patching flat roof, removed it completely and insulated it properly this time, whole room had to be gutted again, replastered and another new kitchen.

Then lived in it for another 12 months

sherlock228

https://forums.moneysavingexpert.com/discussion/comment/82043190#Comment_82043190

2014 roof is not a capital improvement, it is "just" a repair brought on by deterioration over time. You had a leaky roof you replaced it with a new roof. See mentions of technological advances: "the functionality and character of the asset is broadly the same".

PIM2030 - Deductions: repairs: is it capital? - HMRC internal manual - GOV.UK

I agree however that you may have a claim of "complete reconstruction" rather than repairs, so you would be wise to get professional advice from an accountant experienced in property CGT (not all are)

The big picture remains that you get 100% CGT relief for the period it was your main home.
But, just because you initially spent a lot of money making it suitable to live in does not mean many years later you can offset those costs against the subsequent period of "second home" status, particularly if the cost refer to items that no longer exist because they themselves have since been replaced as a matter of "normal" repair or change in technology (removal of oil and replacement by electric heating)

the bottom line is you are self declaring your CGT, it is your responsibility to be "correct".
HMRC will not routinely inspect your tax return and will not call for supporting receipts unless they suspect there is a need to do so.
You could put a calculation in using every penny of everything you have listed and likely would not be challenged. However, if you were, then and only then, will you need to be 100% certain of tax law and what you have done.