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HMRC internal manual

Business Income Manual

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HM Revenue & Customs
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Specific deductions: repairs and renewals: what is a repair: the ‘entirety’

It is important to identify the asset on which work has been carried out. This is because:

  • the cost of repairing a worn or dilapidated asset is normally an allowable expense;
  • the cost of replacing the whole or the ‘entirety’ of an asset is not a repair; it is capital expenditure and not an allowable expense.

What forms the asset or entirety is a question of fact. You need to decide whether the ‘asset’ is in fact a separate asset or is part of a bigger asset.

The basic starting point is to establish the facts about the specific asset you are looking at and then simply to ask the question; does this look like a separate asset? Is it something that stands apart from other assets, is it freestanding or is it something that is removable? This is a question of fact and degree; there are no ‘tests’ that can be applied.

With buildings and structures, the question is whether the item replaced appears to be a free-standing asset. The fact that it is connected to another structure, for example by a flue, does not make it part of that larger asset.

Another question is whether something has become part of something else. If something is a ‘fixture’ then it has become part of the building and not an entirety in its own right. Except where an ‘integral feature’ is being replaced (see BIM46945), replacing a fixture is a repair to the building. As is shown by the name, a fixture has to be attached to the building. However simply being attached does not make something a fixture. For guidance on what is a fixture, see the Capital Allowances Manual at CA26025. If the object is intended to be permanently attached and to make a lasting improvement to the property, it is a fixture, and so part of the building and not an entirety. That guidance also looks at where the capital allowances legislation provides an entitlement to allowances in certain circumstances in respect of expenditure incurred on plant or machinery that is or becomes a fixture.

If the object is only temporarily attached to a building, such as a fridge freezer plugged into a wall socket in a kitchen, and the attachment is no more than is necessary for the object to be used and enjoyed, then it is not a fixture and remains a separate asset.

For examples of how the idea of the entirety applies in practice, see BIM46911.

For more detailed guidance on the entirety issue, see BIM35435 onwards

Sometimes in cases where the whole asset has not been replaced, if a large amount of work is carried out, it is worth considering whether the character of the asset has changed; see BIM46950.