Repair expenses – certain reliefs are no longer allowable?

Hi Adrian,

To assist this thread from the HMRC .Gov site >> https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income

Allowable expenses

When you work out your taxable rental profit you can deduct allowable expenses from your rental income. The expenses must be wholly and exclusively for the purposes of renting out the property. This means that if an expense wasn’t incurred for the purpose of your property rental you can’t offset the cost against the rental income.

The expenses must also be revenue, rather than capital expenses.

Common types of expenses you can deduct if you pay for them yourself are:

general maintenance and repairs to the property, but not improvements (such as replacing a laminate kitchen worktop with a granite worktop)
water rates, council tax, gas and electricity
insurance - landlords’ policies for buildings, contents and public liability
interest on a mortgage to buy the property
costs of services, including the wages of gardeners and cleaners
letting agent fees and management fees
legal fees for lets of a year or less, or for renewing a lease for less than 50 years
accountant’s fees
rents (if you’re sub-letting), ground rents and service charges
direct costs such as phone calls, stationery and advertising for new tenants
vehicle running costs (only the proportion used for your rental business)

Expenses you can’t claim a deduction for include:

the full amount of your mortgage payment - only the interest element of your mortgage payment can be offset against your income
private telephone calls - you can only claim for the cost of calls relating to your property rental business
clothing - for example if you bought a suit to wear to a meeting relating to your property rental business, you can’t claim for the cost as wearing the suit is partly for your rental business and partly to keep you warm - no identifiable part is for your property rental business
personal expenses - you can’t claim for any expense that was not incurred solely for your property rental business

Reply to the comment left by "Neil Patterson" at "13/09/2016 - 13:53":

Thanks Neil, but its contradictory.

"A repair restores an asset to its original condition, sometimes by replacing parts of it. "

"You can’t claim the costs for replacing furnishings or equipment in a property. These aren’t an allowable expense as they’re not part of the property. But costs to repair them can be claimed against your rental income if you’re not claiming the wear and tear allowance."

So is not replacing the carpet restoring the property to its original condition?

A fitted kitchen or bathroom is part of the fabric of the property.

The 10% Wear and Tear Allowence which has been removed used to cover furnishing repair/replacement for Fully Furnished property. From April 2016 You can claim the cost of equivalent replacement carpets , furnishings and freestanding appliances etc. as an expense instead no matter what the furnished staus of the property but not the cost of the original item (ie if you this year decide to provde appliances where there were non before).

See https://www.gov.uk/government/publications/reform-of-the-wear-and-tear-allowance/reform-of-the-wear-and-tear-allowance
"General description of the measure

The Wear and Tear Allowance for fully furnished properties will be replaced with a relief that enables all landlords of residential dwelling houses to deduct the costs they actually incur on replacing furnishings, appliances and kitchenware in the property.

The relief given will be for the cost of a like-for-like, or nearest modern equivalent, replacement asset, plus any costs incurred in disposing of, or less any proceeds received for, the asset being replaced."

You may want to look for an accountant who specialises in rental property, there are lots of non-standard rules and allowences as well as the recent onslaught of changes by the government which take time to keep on top of.

Hi Adrian

The treatment of repairs and renewals in buy to let property started to change in 2014 when HMRC issued new guidance. It has changed again with effect from 6 April 2016 when the Wear and Tear allowance was withdrawn. In fact unless you were providing Furnished Accommodation prior to 6 April 2016 you could not claim for the replacement of carpets.

The replacement of the carpets is now allowable as a deduction so long as you are replacing like for like. If you are not replacing like for like then the expenditure is restricted to what the cost would be for a like replacement. If you would like to know more then I can be emailed at nigelreynolds@reynoldsandco.co.uk

Regards Nigel

I assume that this is for the 2015-16 tax year.

The HMRC rules for that period may be summarised as:
1. Replacing anything that you could take away when you sell the property is not deductible.
2. Replacing anything that is a fixed part of the property is deductible.

As stated above, from 2016-17 tax year, replacement of non-fixed items is again deductible.

Reply to the comment left by "Michael Barnes" at "15/09/2016 - 11:31":

Thanks for that, but are these guidelines regional? On Merseyside, even the stuff that's nailed down is removed.

Reply to the comment left by "Adrian Matthews" at "15/09/2016 - 12:20":

Joking aside. I take it that it's OK to claim for a carpet that has been glued down, or laminate flooring that has been nailed/glued?

Reply to the comment left by "Adrian Matthews" at "15/09/2016 - 12:20":

HMRC: national.

Reply to the comment left by "Adrian Matthews" at "15/09/2016 - 12:41":

probably not.

They don't allow vinyl floor coverings in kitchens/bathrooms even though they cannot be removed in one piece!

https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-case-studies#typical-maintenancerepair-costs
'These are typical maintenance or repair costs that you are likely to incur, and which you can claim against your rental income:
.....
... replacing existing fixtures and fittings, such as radiators, boilers, water tanks, bathroom suites, and kitchens, but not electrical/gas appliances'

https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim2020
'Generally, if the replacement of a part of the ‘entirety’ is like-for-like or the nearest modern equivalent, we accept the expenditure is allowable revenue expenditure.'