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
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•ÌýÌýÌýÌý 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 ITTOIA 2005, s 34(2) or CTA 2009, s 54(2). These sections provide for the deduction of any part or proportion of expenses incurred partly for the purposes of
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