Tax relief for expenditure on property

20 July 2022 / Insight posted in Practical guides

Many business owners are aware of the tax allowances available for items of plant and machinery acquired to use in the course of their trade, but not so many understand how tax relief can be obtained for expenditure on their business property, whether that be an office, a factory, or a room at home.

Expenditure incurred on buying, enhancing or fitting-out a property

Should you incur costs in buying, enhancing or fitting-out a property, tax relief may be available. This document summarises some of the tax reliefs available for expenditure on property.

Expenditure that does not fall within one of these categories will generally be treated as ineligible and no relief will be available for income tax or corporation tax purposes other than on the disposal of the property.

Revenue expenditure

Expenditure such as repairs and maintenance are treated as revenue expenditure and are deductible when calculating taxable profits of a business. Replacement of part of an asset is also revenue expenditure. Examples of revenue expenditure are painting and replacing part of a guttering system. Repairs are fully deductible for tax purposes as long as they are incurred wholly and exclusively for the purpose of the business, are charged to the profit and loss account and do not include any element of improvement.

Particular care has to be taken when repairs undertaken on a new building are treated as revenue, as HM Revenue & Customs will look closely and may seek to recategorise it as capital. If expenditure is treated as capital in nature, tax relief may be available in the form of capital allowances.

Find out more in our ‘Tax relief for expenditure on property’ guide, or contact us directly.