Q&As

Are expenses incurred during an extensive refurbishment of a property deductible expenses of the subsequent property rental business?

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Published on LexisPSL on 12/06/2018

The following Tax Q&A provides comprehensive and up to date legal information covering:

  • Are expenses incurred during an extensive refurbishment of a property deductible expenses of the subsequent property rental business?

Are expenses incurred during an extensive refurbishment of a property deductible expenses of the subsequent property rental business?

In this Q&A we assume that the owner of the property is a non-UK resident individual and is not calculating trade profits on the cash basis.

For details of how a person is taxed on UK property income generally, see Practice Notes: Property income—the income tax charge and Non-resident landlords scheme.

As explained in those Practice Notes, the profits of a property business are calculated in broadly the same way as the profits of a trade. Certain core rules relating to the calculation of trading profits are incorporated into the property income rules, including:

  1. the calculation of profits in accordance with generally accepted accounting practice (GAAP)

  2. the exclusion of receipts or expenses of a capital nature (including expenditure incidental to capital expenditure), and

  3. the exclusion of deductions unless the expenditure has been incurred wholly and exclusively for the purposes of the property business

In terms of the exclusion of capital

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