Russell N

Hi, Thank you for the response - much appreciated. As per my first post, I completely understand that legal and agents' fees are of a capital nature - agreed. What I want some clarifications on is, under the cash basis, on which I report on my tax returns, are these fees deductible according to PIM1095? The provisions in PIM1095 state that under the cash basis, deductions are allowed for capital expenditure. Please kindly advise. Thank you in advance.

Hi, Thank you for the response. Just a follow-up question. How should I read PIM1095, which states that "under the cash basis, deductions are allowed for capital expenditure, with extensive exceptions"? The provisions specifically lists out capital expenditure that are not allowed under the cash basis, which does not seem to include legal and agents' fees for lettings to a new lessee. Could you please kindly advise? "As capital expenditure can generally be relieved in full as a deduction when calculating the profits of a property business under cash basis, capital allowances are not available in respect of capital expenditure." I certainly do not want to incur a higher CGT in the future... Thank you in advance. (https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1095)

Hello, Hope you are well. As the landlord of a shop, I have just rented it out to a new lessee for 10 years. For the new commercial lease, legal and agent's fees have been incurred. I have read that, given the lease is for more than a year, these fees are capital in nature and hence not deductible. However, I report on "cash basis", instead of accrual accounting, are these fees allowed to be deducted in my next tax return? Thank you in advance.