It’s Tuesday!
Let’s talk Tax.
Read this week’s short Tax snippet for doctors & dentists, to help you save money and get more organised with your tax affairs. It’s just to give you a flavour – in fact, you can read it whilst you drink your morning coffee!
Claiming tax relief on repairs & renewals
Generally, equipment purchased for the exclusive use of business qualifies for tax relief. At the moment, the limit per year is £200,000, called the Annual Investment Allowance, which allows 100 percent to claimed in the relevant financial year. Purchases over this allowance are given gradual tax relief, at 18 percent per year.
If repairs are required to your equipment then these (generally) also qualify. The general rule here is that if you are replacing like for like, then 100 percent tax relief can be claimed in the year the costs are incurred.
However, there are certain items and situations that require more thought.
Claiming tax relief on refurbishment
Particularly when it comes to refurbishment, things can get tricky. If you give your walls a new coat of paint then this usually can be claimed as a repair, as you haven’t made any significant changes to the functionality of the room. However, if you are converting a dark, damp back room into a new functional treatment room, then the paint-job may not be considered a repair cost by the tax-man.
It is more likely to be considered a refurbishment costs, which has a different tax treatment and may not be able to be claimed until the property is sold.
Repairs for Rental properties
Broadly speaking, the rules are similar for rental properties.
However, a rental business is unable to claim tax relief on the purchase cost of items, only the repair or renewal element.