The business I work for owns the building we work in. We are renovating an area of it to be turned into a showroom. We will obviously be paying out for paint, materials, some furniture and a shop front being built in the doorway, is this all allowable? Also if the building is owned by the partners privately, not on the business's books anywhere, is it then a drawing and something they should claim for privately through their own accountant?
Before reading anything that I write here I just want to say that answering this is above my expertise and your partners need to consult their accountants about this. There may be many other variables around how the property was purchased, how it is held, what reliefs were claimed, are there any covenants on the property requiring it be restored at some stage, etc. that you are not privy to due to it being a privately owned property used by the business.
That said it is clear that this would be capital expenditure.
The furniture is seperate and its very much down to the materialarity of the furniture whether to expense or capitalise.
The change to part of the building is capital expenditure in nature on an asset used by but not owned by the business so in some ways similar to a tennanted property being improved by the tennant who would need to amortise the expenditure over the duration of the lease.
Be careful on matters such as AIA as this is a property improvement so AIA and other capital allowances would not be available for the changes to the shell although things like the furniture would be covered under AIA.
All in all though Steve, general advice is that for this one the partners really need to speak with their accountants who will be privy to all of the details of the property so be able to make an informed decision as to the best way to proceed.
Pretty sure that there won't be much help coming from HMRC for the main costs though due to this being classed as an improvement (even if it doesn't add any value).
Sorry that I'm not much help on this one. Maybe Marks or LesHoward might have some better advice when they spot this thread.
All the best,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Thanks for the answer, I was thinking it may be one for their accountant, so as ever I'll write them a note for year end and maybe drop it into its own separate account, let the accountant pop it where he likes
