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Is this a tax deductible expense?

Question
I have a really old bathroom in my let property, over 15 years old. I want to take it out and install a new bathroom for the new tenants, totally decorate and upgrade. Is this tax deductible?’

Arthur Weller replies:
Here is a quote from HMRC’s property income manual (www.hmrc.gov.uk/manuals/pimmanual/PIM2020.htm):" Even if the repairs are substantial, that does not of itself make them capital for tax purposes, provided the character of the asset remains unchanged. For example, if a fitted kitchen is refurbished the type of work carried out might include the stripping out and replacement of base units, wall units, sink etc., re-tiling, work top replacement, repairs to floor coverings and associated re-plastering and re-wiring. Provided the kitchen is replaced with a similar standard kitchen then this is a repair and the expenditure is allowable. If at the same time additional cabinets are fitted, increasing the storage space, or extra equipment is installed, then this element is a capital addition and not allowable (applying whatever apportionment basis is reasonable on the facts). But if the whole kitchen is substantially upgraded, for example if standard units are replaced by expensive customised items using high quality materials, the whole expenditure will be capital. There is no longer any relief for ‘notional repairs’, which is the notional cost of the repairs that would otherwise have had to be carried out."

Property Tax Insider This sample question and answer is taken from Property Tax Insider, a monthly UK tax saving magazine for landlords and property investors.

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