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HMRC internal manual

Business Income Manual

Specific deductions: repairs and renewals: overview

This page provides an overview of the issues that need to be considered when deciding whether the cost of ‘repairs’ is allowable as a deduction in computing the taxable profits of a trade or property business. The general position is that:

  • the cost of a repair is normally allowable expenditure; but
  • the cost of replacing an asset or of making a significant improvement to an asset is capital expenditure and not allowable as a deduction.


A deduction for expenditure on repairs is given when the cost of the repair is deducted in the profit and loss account in line with generally accepted accounting practice (whether that is UK GAAP or IAS). Further guidance on timing is at BIM46905.

Replacing an asset

Replacing a part of an asset is a repair to the asset, but replacing the whole asset is not a repair and is not an allowable deduction for tax purposes because it is capital expenditure. It is therefore crucial to determine what forms the asset or ‘entirety’ in question. For guidance on what constitutes the asset and on repairing or replacing an asset, see BIM46910.


The cost of improvements to an asset is not an allowable expense. For guidance on what is an improvement, see BIM46915.


The cost of altering an asset so that it does something different is not allowable. For guidance on alterations, see BIM46915.

New materials

Repairs are often carried out using new materials. The use of new materials does not mean that the repair is not allowable. For guidance on cases involving the use of new materials, see BIM46920.

New technology

Similarly, the introduction of new technology may mean that new parts of an asset are better than or last longer than the old parts. The question to ask is whether the asset as a whole has been improved. If it does the same job as it did before then the expenditure may well be simply a repair. For guidance on this point, see BIM46925.

Change of ownership

Even if an asset has been recently acquired, the cost of repairs usually remains allowable expenditure. For example, the cost of routine repairs and maintenance remains allowable expenditure. If an asset is acquired in a run-down condition, however, the cost of putting the asset into a useable condition is capital expenditure and not an allowable deduction. For further guidance on this point, see BIM46935.

Capital allowances

The capital allowances legislation contains deeming provisions that treat significant amounts of work on ‘integral features’ in a building, including the electrical or air conditioning system, as capital expenditure which is not allowed as a revenue deduction. For further guidance on this point and other issues involving capital allowances, see BIM46945 and CA22340.

The capital allowances legislation also provides an entitlement to allowances in certain circumstances in respect of expenditure incurred on plant or machinery that is or becomes a fixture. For further guidance, see CA26025 onwards.

Character of the asset

As a final check, consider the results of the work carried out. If as a result of the work the asset can simply be used to do the same job as before then it is likely to be a repair and therefore allowable expenditure. If it can do more or can do something different then the character of the asset has changed and the work is likely not to be an allowable expense. See BIM46950 for further guidance.