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Posted Fri, 25 Mar 2022 07:30:41 GMT by shamilt1
Hi. I’m a sole trader using cash basis accounting and I take care of my own accounts. Usually it’s straight forward enough, but this year I’ve bought a workshop to run my business from and there are some purchases that I don’t really know where I stand. The heating is insufficient -for my business it needs to be warm so I’m having a wood burner fitted- can I offset this purchase (and going forward the smokeless fuel and wood cost) against my profit? The other things I’m unsure of are an internal security shutter, led lighting and a door chime so I can tell if a customer has entered. I’ve also replaced 2 Velux windows like for like as the roof was leaking (I’m pretty sure I can offset this one). Any help is much appreciated- thank you.
Posted Mon, 28 Mar 2022 10:33:00 GMT by HMRC Admin 17

Hi,
 
There is more on expenditure and cash basis at :

Business Income Manual    and in particular capital expenditure at :

BIM70035 - Cash basis: expenses: capital expenditure  .

No deduction will be allowed for the shutters (see BIM70036) but the wood burner LED lighting and door chime are likely to be allowable capital expenditure.

The smokeless fuel and wood cost would be a revenue expense.

To the extent the replacement windows are a repair then they are likely to be a revenue expense, however see BIM46935 which considers the change of ownership
of an asset and should help you decide if the cost of the windows is capital or revenue.

If it were capital then no deduction will be allowed see BIM70036
BIM70030 - Business Income Manual - HMRC internal manual - GOV.UK
Supplementary guidance on how to check tax calculations or work out the trading profits of a business for Self Assessment tax return.

Thank you.

 

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