Replacing a garage in a buy-to-let property

Revenue or Capital ?

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I am having difficulty in advising a client with a buy-to-let residential property who is considering replacing an old (decrepit) brick garage at an estimated cost of £15k.  There is obviously an element of capital improvement but on what basis could it be apportioned between Revenue & capital for tax purposes?

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By ireallyshouldknowthisbut
16th Dec 2020 15:11

There was a recent discussion about replacing a garden shed which may be relevant if you search.

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By Montrose
17th Dec 2020 13:49

If the existing decrepit garage is utilisable, then arguably Odeon Theatres will say this is a repair.
If it is not capable of being used as is, then the expenditure looks more like a capital payment on the Law Shipping principle.

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By Montrose
17th Dec 2020 13:49

If the existing decrepit garage is utilisable, then arguably Odeon Theatres will say this is a repair.
If it is not capable of being used as is, then the expenditure looks more like a capital payment on the Law Shipping principle.

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By unearned luck
17th Dec 2020 23:52

This is a tedious brief question, so much so that I wonder why you think it is obvious to readers that there is an element of capital improvement? Repairing or replacing anything that is broken or damaged is an improvement in a trite sense. I assume that you don't mean that. Are there facts that you have failed to mention?

The Law shipping/Odeon answers are a bit previous as you have given no indication of how long your client has been letting the property.

Assuming Law Shipping can't be applied, come to a conclusion if there is really an element of improvement, for example is the footprint of the new garage large than that of the old? Unless any element of improvement is small or arises out the use of modern building materials and techniques then the whole of the cost will be capital. See the recent FTT case of Steadfast for a success for the taxpayer and read-up on notional repairs, to disabuse yourself of the belief that apportionment is possible.

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