Rental Income Wear and Tear

Rental Income Wear and Tear

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A client rents out a property for which we have adopted the wear and tear allowance in the past. However, this year she has rented out a further room, one which she has kept for herself in the past and has had to fireproof some doors and install a fire alarm system to comply with HMO requirements. HMRC guidance states "However, in addition to the 10% allowance, a taxpayer can also deduct the net cost of renewing or repairing fixtures that are an integral part of the buildings. The net cost means the cost of the replacement less any amount received for the old item."  Am I right in thinking that this work does not fall into the above and will not be allowable, even though it is a requirement in order to let the property.

Opinions would much appreciated.

Stanley

Replies (3)

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By MBK
21st Dec 2011 12:52

You are correct

But if this is a HMO then you can claim capital allowances for the fire alarm to the extent that it is in the common areas (excluding kitchen). With AIA this should get 100% relief for the attributable cost.

If the client has several HMOs you should be looking (if you haven't already) to get a capital allowances report done - because there will probably be quite a lot of eligtible expenditure.

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By Steve Kesby
21st Dec 2011 13:28

Fire safety systems and doors

The doors are deemed part of a building under S.21 CAA 2001, so unless the expenditure was incurred prior to 6 April 2008, no CAs can be claimed, in my opinion.  The fire alarm in the common parts should qualify for CAs as MBK says.

I imagine that the HMRC guidance you refer to is dealing with the application of the capital allowances integral features provisions.  Wear and tear allowance (or the non-statutory renewals basis) is essentially a replacement for capital allowances, and under the capital allowances integral features rules, you can claim an income tax deduction for replacements, subject to certain paramaters.  It seems reasonable that you should be allowed to do similar under the wear and tear basis.  This expenditure doesn't constitute integral features though.

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By StanleyW
29th Dec 2011 12:05

Thank you, MBK and Steve for the helpful comments and Happy New Year to you.

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