Personal Tax Property Income

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Hi <BR><BR>Same homework different question !!!<BR><BR>If a wooden fence originally costing £1900 was replaced with an iron fence costing £4800 what figure would go as a claimable expense in the tax computation. <BR><BR>Sure I've not notes on this somewhere but I can't find them.<BR><BR>Thanks again in advance for any help.<BR><BR>Roz Tench<BR>

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Personal Tax Property Income

    Not straightforward. These issues seldom are. There are a couple of cases where claims for fences as revenue have failed, notably an auction ring and a football club. Equally, a claim for a replacement factory chimney succeeded. The issue hinges on whether it is a complete replacement of the asset or not. If the fence is a separable asset and is now replaced it will probably be capital and may qualify for capital allowances. If the fence is incedental or inseparable from the main asset it is then a repair and is a revenue expense.<BR><BR>In reality, I would claim this as an expense, but make full disclosure and warn the client that the claim might fail.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Personal Tax Property Income

    I think this would depend on whether you were replacing the wooden fence because it was broken or just improving. It would also depend on whether the propety was already being rented out or the fence was replaced before renting began. If it was before then this would be capital and not allowable.<BR><BR>I would be tempted to disallow this as it is an improvement and therefore capital.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Personal Tax Property Income

    why do you think it is an improvement?<BR><BR>Without the date of the original investmeny there is no way of comparing cost. You had a fence before, you have a fence now, exactly what has improved?

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