Guesthouse Accounts

kelzibubble Registered Posts: 1 New contributor 🐸
Hi all. I'm new to the forums, and i need a bit of help!
I am in the process of completing accounts for a partnership who run a b & b. Last year they spent upwards of £14,000 upgrading a number of their renting rooms. What I need to know (and I can't find guidance anywhere!) is does this count as an addition to the property value, or is it f&f? They have made the rooms en-suite as well as replacing furniture and furnishings?
Any advice would be apppreciated!


  • ste2901
    ste2901 Registered Posts: 9 Regular contributor ⭐ 😼 ⭐
    Hi Kelly,
    I'm not certain, but if there is an accurate breakdown of the works carried out, it may be an idea to separate the costs between F&F & Building improvements.

    On another note I am just in the process of evaluating a B&B for one of my existing clients, and would really appreciate a quick chat if you have the time.


  • T.C.
    T.C. Registered, Tutor Posts: 1,448
    When I deal with "upgrades" of rental properties I try to ascertain whether the work was a necessary repair or whether the work was an actual upgrade. A new bathroom could be a necessary repair, whereas the addition of a new en-suite would be an upgrade. Hope that helps - it is always an awkward area.
  • Doug7
    Doug7 Registered Posts: 20 Dedicated contributor 🌟 🐵 🌟
    B&B trade will qualify for capital allowances
    You need to obtain a detailed breakdown of work
    Most of it may qualify under the AIAllowance
    I would put it in the balance sheet as fixture and fittings and then do a detailed breakdown of capital allowances
    the sinks showers heating ventalation electrics sound insulation general fixture and fittings will qualify under general pool or integral features.
    Could not find info on HMRC
    If you can go to one of Tim Palmers aat courses
  • Vonni
    Vonni Registered Posts: 63 💫 🐯 💫
    Hi soft funishings would be a renewal on the P&L, small furniture items under say £100 if it was to replace old or damaged units and not expected to have a useful life of more than one year I would treat as a renewal on the P&L, more expensive items I with a longer life I would treat as F&F and depreciate over their useful life - in any case if you capitalised all the items they would attract the AIA for tax purposes - but you may not want to put the whole cost through the P&L in one year as this may distort the profit. You need to have a clear accounting policy and agree this with your client.

    With regard to the en-suite facilities - if this is a complete new facility I would definitely capitalise by adding it to the property value. But if there were repairs or upgrades I would treat this as repairs and renewals on the P&L.

    I have only been challenged once by the Revenue on treatment of an R&R cost when I replaced old wood double glazed door & window units, in a flat I owned, with PVCU. But I argued that this was a replacement with a modern version - in reality the PVCU units were cheaper than finding a carpenter to make bespoke wood frames as I got quotes for both products - the Revenue agreed with the treatment and later at an AAT mastercourse - which was most likely by Tim Palmer this was an issue that he explored along with several others - so if you do get a chance to go to one of the Mastercourses I highly recommend it.
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