B2.411 Business premises—expenses

Business tax
Business tax | Commentary

B2.411 Business premises—expenses

Business tax | Commentary

B2.411 Business premises—expenses

It is important to analyse the tax treatment of premises expenses carefully as it is often a category of expenditure that might include capital related items. Generally, the cost of a repair or replacement of a minor part of an asset is usually allowable expenditure, but the cost of replacing an asset, altering an asset such that it performs a different function, or making a significant improvement to an asset is capital expenditure and not allowable as a trading deduction. See generally, BIM46900.

Allowable premises related expenses

The items listed below have been held to be deductible in calculating trading profits:

Rental and lease payments


    •     the rent of such part of a dwelling house or domestic offices as is used for the purposes of a trade or profession, up to a limited proportion. Such a proportion was allowed in Thomas1, but is also allowed by virtue of CTA 2009, s 55(2). This section provides for the deduction of any part or proportion of expenses incurred partly for the purposes of the trade and partly for some other purpose that can be identified as incurred wholly and exclusively for the purposes of the trade, and rent on dual purpose accommodation can be apportioned in this way2


    •     the rent of leased business premises3


    •     the rent for disused business premises in certain circumstances4;if the premises are sublet at a lower rent, the deficiency is deductible5


    •     an annual sum paid for the exclusive use of buildings, the sum being

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