Owner-Managed Businesses

Residential property and capital allowances

Produced by Tolley in association with Martin Wilson and Steven Bone
  • 21 Mar 2022 07:24

The following Owner-Managed Businesses guidance note Produced by Tolley in association with Martin Wilson and Steven Bone provides comprehensive and up to date tax information covering:

  • Residential property and capital allowances
  • Residential property ― plant and machinery allowances
  • Residential property ― structures and buildings allowances
  • Furnished holiday lets and plant allowances

Residential property and capital allowances

Residential property ― plant and machinery allowances

Ordinary residential property does not, and never has, qualified for capital allowances. as CAA 2001, s 35 denies plant allowances for expenditure incurred in providing plant or machinery for use in a ‘dwelling-house’.

Despite this, residential landlords have in recent years been a major target for the more bullish capital allowances advisers. Using houses of multiple occupation (HMOs) as an illustration, the argument of these advisers has been that shared or communal areas were not part of a dwelling-house. Or put another way, for a property in multiple occupation, the demise of each dwelling-house was limited to the private bedrooms.

This argument was rejected by HMRC and was considered by the courts in Hora Tevfik. In that case, a plant and machinery allowances claim failed in respect of what were said to be communal parts of three residential buy-to-lets, namely

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