Residential property and capital allowances

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Owner-Managed Businesses

Guidance

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

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Martin Wilson

Martin Wilson, specialised in capital allowances for 25 years before retirement. He is the author of numerous published works on the subject, including Bloomsbury's Capital Allowances: Transactions & Planning, and the capital allowances content of LexisPSL, Tolley's Tax Guidance, Tolley's Tax Planning and Simon's Tax Planning.

Steven Bone

Director at Gateley Capitus

Steven is a tax-qualified Chartered Surveyor who has specialised in tax incentives, including capital allowances and land remediation relief for over 20 years. Previously he held senior specialist positions in 'Big 4' and national mid-tier accountancy firms. Capital allowances underpin income tax and corporation tax calculations by giving tax relief for money spent to buy, build or alter commercial property. Steven works with owner-occupiers, investors and their advisers to provide capital allowances opinions, transaction support and specialist valuations for all types of property. This includes resolving HM Revenue capital allowances enquiries and giving expert evidence to tribunals and courts. Steven has contributed to many articles and books, including: Bloomsbury Professional's Capital Allowances, Tolley's Tax Planning, RICS's official Guidance Note for surveyors on Capital Allowances and Land Remediation Relief, and Practical Law Company's Practice Note on Commercial Property Standard Enquiry 32 dealing with capital allowances.

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