Over the years I have completed accounts and the Self Assessment form for a client of mine who is a sole trader (accupunture practitioner). Recently they have moved house and made a room into a clinic. They have been refurbishing the clinic.
Just after some advice really. If they use this room solely for business, am i right in saying they may be liable for capital gains tax when they sell.
Also after some advice on the expenditure incurred whilst making improvements. Not sure if there has been any building work think it is just decorating etc.
Any new items of furniture/fittings, capital allowances/AIA can be claimed.
Decorating etc - put down as expenditure.
Am I on the right track, or will things get complicated..
Yes a room in a house used solely for business would be subject to capital gains tax when it is sold. This is based on the assumption that a % of the household bills have been claimed as business expenses and the room is not used for domestice purposes. A clinic would almost certainly fall into this category.
The furniture and equipment should fall under the annual AIA, but the decorating would probably need to be capitalised as it was part of the expenditure needed to get the room into a fit state to trade from.
