Property Newsletter: Issue 3

Property Newsletter: Issue 3 - Image_of_house_on_desk 10th August 2023

Capital allowances can be claimed by landlords’ expenditure on “plant and machinery” which can reduce your profits and indeed create losses, the use of such is not covered here, but they can certainly be very beneficial.


The property in question is important and will determine the allowances that can be claimed and at what value, with claims ranging from 100% of the costs incurred to 3%.


For a standard residential letting, a claim for capital allowances is restricted on assets that are for use in a dwelling house, however at this point you would be looking to the rules that govern the replacement of domestic items, which was previously known as ‘the renewals basis’.


However, if a landlord owns for example a block of flats, then capital allowances can be claimed on the “communal areas” which will include lighting, lifts, fire alarms etc, but not on the areas that are considered to be “dwellings”.


This is also the case for houses of multiple occupation. Care is needed when either purchasing or maintaining and upgrading the property to ensure that the purchase contract and invoices are clear and provide you with the
details required.


For those that have furnished holiday lets, the position is very different in that, although this is residential property, it is excluded from the “dwelling house” rule as this property is considered to be an asset in a trading activity.


The full range of plant and machinery allowances would be available for expenditure on plant used in commercial properties, and again care is needed when purchasing such properties, as the contracts will need to stipulate the historical claims for relief, to allow you to consider any future claims.


If you need more information, then please do get in touch with your local Whitings Office.


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Disclaimer - All information in this post was correct at time of writing.
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