As with most things you can claim tax relief on, repairs or refurbishment to your practice may or may not qualify.
Dental Accountant, Simon Vincent blogs:
We all like new things. We also all know that those new things will eventually break. Broken things need to be fixed, or replaced. You may think that repairing something you use in your business is clearly going to be a business expense that qualifies for tax relief, but that’s not always the case.
In general, any equipment you purchase for use in your practice is going to qualify for tax relief. There is an annual limit for items that can be claimed in full during the year of purchase – currently £200k per year. Any amounts above and beyond this will be gradually written down over time at a rate of 18% per year.
Similarly, any repairs to your equipment will qualify for relief, in full, in the year the cost is incurred.
Where things get interesting is when refurbishing premises. Thinking of refurbing a surgery, or converting that unused room into a new surgery?
Genuine repairs are normally allowed as an expense, provided you are essentially replacing like for like. However, where there is an element of improvement to expenditure incurred on a property, this may not qualify for any relief until that property is eventually sold.
It can be subjective as to whether or not something is an improvement rather than a repair, and the answer from a tax point of view may not necessarily be straightforward. Redecorating is a good example. Simply putting a lick of paint on the walls may well have improved the room, but you haven’t added any more functionality to the room, so in the eyes of the tax man, this is a repair. Unless you’re now able to use that room and you weren’t before. Then it is an improvement. Fun, eh?
What about rental property? Broadly speaking, the rules are similar. However, a rental business (except for those qualifying as FHL) can only receive relief when replacing or repairing items, not when originally buying them.
Of course, there’s always an exception to the rules and to cover everything would take far too long and be far too boring. In short, we’d recommend you contact your account manager for specific advice before incurring any significant expenditure.
If you would like to find out more about what is eligable for tax relief or want to reduce your tax bill, call us on 01872 300232 or email us at hello@hivebusiness.co.uk.
