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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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What are the rules expenses property?

Resolved Question:

What are the rules for claiming expenses for let property?

For furnished property?

For unfurnished property?

Were there any changes to the rules since year 2000?

Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

There are some changes to claiming expenses/allowance on rental property with effect from 6 Apr 2016 and they are in the main restriction on tax relief on loan interest and withdrawal of wear and tear allowance on furnished letting.

More information on this can be found here

http://www.ukbudget.com/2015-summer-budget-measures/rental-property-allowable-expenses.aspx


The rules have not changed since 2000.

Generally, you can claim the running costs of your letting business as property expenses.

Capital costs such as expenses relating to the purchase or sale of, or improvements, additions and alterations to, land or property or the costs of purchasing machinery, furnishings or furniture cannot claimed as property expenses but you may be able to claim capital allowances or a renewals deduction.


There is some useful information on allowable expenses a landlord can claim here

http://www.which.co.uk/money/tax/guides/tax-on-property-and-rental-income/allowable-expenses-and-allowances/

HMRC has some notes to help you fill in UK property pages of your tax return and property expenses are covered on pages UKPN 4-6 here

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/420043/SA105-Notes-2015.pdf

see also here

https://online.hmrc.gov.uk/information/help?helpcategory=selfAssessmentFiling1112&affinitygroup=&helpid=PropertyExpenses


I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 2 years ago.

Just to be clear...capital allowances can only be claimed for furniture?

What would the following expenses be considered as allowable?

To get the property into a condition that it can be let out the landlord carried out the following works.

Split the living room into two rooms but putting up a plasterboard wall to create an extra room to let (2 bed turned into 3 bed).

Plastered the whole property internal walls and ceilings.

Painted the whole property internal walls and ceilings.

Put in a new bathroom suit and tiled the bathroom walls & floors

Put in new kitchen units and tiled the floors.

Laid laminate/carpet flooring for the rest of the property.

After two years of let, the property was damaged by the tenant in the third year of their tenancy and for that third year the tenant did not pay rent for 9 months. When they were evicted, the tenant left the property causing malicious damages.

The landlord again carried out renovation work as follows.

Plastered the parts of property internal walls and ceilings.

Painted the whole property internal walls and ceilings.

Tiled the bathroom walls & floors

Replaced carpet flooring for the rest of the property.

Expert:  taxadvisor.uk replied 2 years ago.
Thanks for your reply. I will revert to you in the morning. Many thanks
Customer: replied 2 years ago.

OK, thanks.

Expert:  taxadvisor.uk replied 2 years ago.

Thank you for your patience

[q]

To get the property into a condition that it can be let out the landlord carried out the following works.

- Split the living room into two rooms but putting up a plasterboard wall to create an extra room to let (2 bed turned into 3 bed).

- Plastered the whole property internal walls and ceilings.

- Painted the whole property internal walls and ceilings.

- Put in a new bathroom suit and tiled the bathroom walls & floors

- Put in new kitchen units and tiled the floors.

- Laid laminate/carpet flooring for the rest of the property.

[a]

These costs were incurred to enable you to let the property in the first place and therefore would be regarded as capital costs (improvements to property) to enhance the value of the property and added to your purchase price as allowable costs in calculating capital gain on sale.

[q]

After two years of let, the property was damaged by the tenant in the third year of their tenancy and for that third year the tenant did not pay rent for 9 months. When they were evicted, the tenant left the property causing malicious damages.

The landlord again carried out renovation work as follows.

- Plastered the parts of property internal walls and ceilings.

- Painted the whole property internal walls and ceilings.

- Tiled the bathroom walls & floors

- Replaced carpet flooring for the rest of the property.

[a]

These costs would fall under the heading of property repairs and maintenance and would be allowable property expenses in calculating the profit from property income.

I hope this is helpful and answers your question.

If you are happy and there are no more issues I will appreciate if you would kindly rate/accept the service I provided to ensure I get credited for it by Just Answer.

Customer: replied 2 years ago.

the difference between the two seems to be that one renovations took place before the Tennant moved in and the other after the tenant moved out.

is that how the distinction is made?

Expert:  taxadvisor.uk replied 2 years ago.
Thank you for your reply..

The distinction is
-the first scenario covers the whole property and expenditure incurred before the property was in a condition that it could be let
- the second scenario is repairs caused by malicious damage and replacement/repairs in bits as opposed to changing the whole bathroom and partitons etc

I hope this is helpful.

If you are happy and there are no more issues I will appreciate if you would kindly rate/accept the service I provided to ensure I get credited for it by Just Answer.
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