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Hello, Paul, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.
Repairs can be offset against rental income, but improvements would, in the end, be used to enhance the acquisition value for Capital Gains Tax (CGT) purposes on ultimate disposal.
Our Club room needed a new roof. Our Honorary Auditor was a Price Waterhouse man so he consulted PW's Tax Experts and their opinion was that as the Club had always had a roof its replacement was revenue expenditure. We put it through as that and the Inland Revenue, as they were then, did not bat an eyelid. So I would suggest that the 12K on the roof goes against revenue and the 4K and 8K constitute improvements.
I do hope that you have found my reply of assistance.
Of course HMRC might rule the 12K as an improvement also, but I am only quoting how we did it way back on very good professional advice from what is now PWC.
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These would be classified as plant and machinery, in taxation the definition is very wide. Accordingly they would be capital allowance items and under current rules would be written off at 100% against profits as part of what is called the Annual Investment Allowance (AIA).
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