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Leasehold Improvements - Tax

In August 2008, we took an 8 year lease on new premises. We then spent approximately £6,500 on improving those premises (things such as electrical work, carpets, plastering, plumbing etc).

I'm now wondering what the most tax efficient way would be of dealing with the cost of these leasehold improvements? Do we put the full amount through the P&L for our financial year of 2008/09 (1st July 2008 to 30th June 2009) or do we depreciate the "asset" over a number of years (perhaps 8 years as the lease is 8 years in length)?

Any suggestions would be much appreciated.

Many thanks.


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Any thoughts?

Does anyone have any thoughts on this?

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Your costs of improving your leasehold interest appear to me to be capital in nature, these will be added to Fixed Assets (leasehold improvements).  The depreciation method you suggest seems sound.

From a tax point of view you may be able to claim Capital Allowances on certain plant & machinery (carpets).  You may have a claim on the other items under the integral features rules however you need to look into this in more detail.  What was the work for?  If it was just for a general tidy up, then there may be no allowances at all.


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Works carried out

The works that were carried out was for a complete refit of our new premises; we turned them from an empty shell that had no plaster on the walls, no carpet on the floors etc, into a very good looking retail and office premises. As well as the plastering, carpeting etc, we had to erect some stud walls to create store rooms, install some kitchen and w/c facilities and install new lighting and electrical circuits.

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Why are you asking here?

Surely your accountant should be able to answer your questions? Or don't you trust him to get the answer right?

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It's not a case of not trusting anyone! I just like to get a good consensus of opinions; as I'm sure you all know, there's more than one way to be most tax efficient!

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Yes, but

only one correct way of dealing with expenditure already incurred

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