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HMRC internal manual

Business Income Manual

Specific deductions: repairs and renewals: what is a repair: improvements

If the taxpayer restores an asset to what it originally had been, then that is a repair and the expenditure would normally be an allowable deduction in computing the profits of the trade.

If the taxpayer alters or improves the asset then it is not a repair; the expenditure is capital and is not an allowable deduction.

Whether something has been repaired or improved is a question of fact. So that you can decide whether or not the costs are allowable, you have to look at the nature and extent of the work carried out. Care needs to be taken where a programme of works has been carried out as some works may simply be repairs, while others are alterations or improvements.

With changes in regulations or technology it may not be practical or possible to carry out a repair using the same materials or equipment as originally used. For guidance on whether using modern materials means that something is a repair or improvement, see BIM46920.

If the work amounts to an alteration or improvement then there is no revenue deduction for any part of the expenditure. This includes things like redecoration after the main work has been done (redecoration would ordinarily be a revenue expense). No deduction can be obtained for any notional repair expenditure, i.e. what it would have cost to simply repair the asset; see BIM46930.

You also need to consider whether the work is on integral features, see BIM46945.

In borderline cases it is worth considering whether the character of the asset has changed, see BIM46950.


A Ltd trades from premises that consist of a showroom and warehouse. They decide to modernise their premises. They completely renew the roof; refurbish the staff kitchen; they extend the showroom by demolishing an interior wall and building a new one and installing a new floor and false ceiling to modernise the extended showroom area.

The new roof simply returns the roof to original condition. It is neither an alteration nor improvement; it is simply a repair of the building. In the same way, the refurbishment of the staff kitchen is simply a repair of the building. These are allowable expenses.

The work carried out on the storeroom/showroom has resulted in a larger showroom to a higher standard. This is an alteration and improvement. The expenditure is capital expenditure and therefore not an allowable deduction.

For further information on these issues, see BIM35445.