I hope someone could help me on this. Lets say that I have rents receivale £6,000, and I also have the following expense, Insurance £300, Letting fees £700, office expense £20, and repairs and maintenance £4000 (which includes £3,800 for a new kitchen). so what shall I do with those numbers? Anything qualifies for AIA?
Hi there, I would say the £6000 is sales code, £300 insurance code (overheads) £700 professional fees (overheads) 7600 code ish or you could create a new one as letting fees/commision, as regards the £4000/3800 you need to decide if the new kitchen is a balance sheet item or P&L is it replacing a kichen or is it a new one, I would check with the accountant first and ask him where he would want it put. Hope this helps.
You haven't said if it furnished or unfurnished. Which, depending on repairs and maintenace may make a difference.
It can also make a difference, if the "new" kitchen was a straight replacement for one that was already there, or was a complete modernisation. again, can make a difference.
Monica, if its furnished property you would be able to claim 10% wear and tear allowance but this would mean you could not claim capital allowances, it's one or the other. if the new kitchen was put in prior to letting it cannot be classed as a repair /renewal (sounds likely to be an improvement anyway) but can be included in enhancements should the property be sold and therefore mitigates any cgt.
Thanks for your reply, can I claim that new kitchen on capital allowance? and use AIA to cover it bcuz its less than £50,000? so if I use wear and tear allowance then I cannot also use Capital allowance?
Can I claim capital allowance on to let residential accommodation?
I am pretty sure (without going through all the notes) that only wear and tear allowance can be claimed on furnished accomodation at 10% net rental income.
Alternatively you can also claim for the replacement of an individual item under the renewals allowance. You cannot claim both, and the 10% allowance is claimed every year and is probably the best option.
You cannot claim any capital allowances for furnished accomodation.
