SEARCH, INDEX, UPDATES, CONTENTS, IDEAS, RENTAL INCOME
Caution - stated change of Revenue practice with immediate effect announced in Tax Bulletin June 2002 - "We now accept for both Schedule D and Schedule A that replacing single glazed windows by double glazed equivalents counts as allowable expenditure on repairs."
The following notes were written before the above announcement -
REPAIRS - withdrawal of concession B4.
If you receive income from renting a property you can normally deduct the cost of repairs from the amount of income on which you pay tax. If you carry out an improvement or alter a property you do not get a deduction from the rental income, but the cost may reduce your capital gain on disposal.
Until 5 April 2001 the Inland Revenue would normally allow you to deduct the repair element of an improvement from your rental income. This has been known as concession B4. A typical example would be replacing rotten single glazed windows with new double glazed units. Replacement kitchen units might also be of a better design.
This long standing concession has been withdrawn from April 2001. Will you replace your rotten single glazed windows with new single glazed windows and get tax relief or with double glazed units and forgo any income tax relief?
The Inland Revenue leaflet IR150:Taxation of Rents in which paragraphs 132, 141 and 144 refer, is no longer available on their website.
CAPITAL GAINS
Do you know the significance of leasing premises to an unquoted Limited Company? If not you would be well advised to take advice.
Reminder - disclaimer applies. Please feedback your comments. This page was last modified 26 June 2002.