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Posted Thu, 19 Oct 2023 11:29:44 GMT by Lindsey
Hi We (as tenants) are looking to undertake a major building repair/upgrade of around £500,000 with a large portion of this being covered by a contribution from the building owner. Can we offset the contribution in the accounts or would we have to show the income and expense separately? Many thanks.
Posted Tue, 24 Oct 2023 08:17:26 GMT by HMRC Admin 17

Thank you for your question.

As this forum relates to income from property and in order to fully answer your query, I may need additional information as you have stated you are the tenant of the property, not the landlord/ property owner.

In general terms, building works which may be deemed as improvements to the existing property such as extensions, dormers, converting a disused barn to a holiday home etc would be classed as capital expenditure, so not claimable/ cannot be used to offset against rental business accounts.

If you were to be the property owner, then if/when the property is then sold in the future, it may be used to offset against any capital gain.

Further guidance can be found here with PIM2025 & PIM2030 as starting points:

Property Income Manual  and  :

PIM2030 - Deductions: repairs: is it capital?  .

I would advise to keep a record of the repairs/upgrades as if they cannot be used against rental income,
it would then be convenient if/when capital gains arise.

Thank  you .

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