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markj128
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Capital vs Revenue expenditure
Hello,
I really need some help on defining the two with regard to the less obvious differences.
I’ve come across questions relating to allowable expenses on property business profits and FHL properties and struggled with areas like new roofs, new chimneys, new boundary walls and things of that nature.
Is there any particular way I can approach this so I can confidently know if an FHL property gets a new roof, this is an allowable expense, or disallowed as it is capital?
My book does try to explain it but not very well.
Many thanks
Mark
Tax Tutor
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When dealing with FHL you must separately learn the rules for domestic items used in a residential property which is by far the most likely issue to be tested now on FHL
In respect of the other examples you quote it is the problem of course of differentiating between what is a repair and therefore allowable revenue expenditure and what is an improvement and is therefore capital expenditure which will only be deductible for tax purposes in computing any chargeable gain on the future disposal of that asset.
If a roof is damaged and it has to be replaced then that will be revenue expenditure, if however the opportunity was used to convert the loft space into extra rooms then that would be an improvement and treated as capital
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