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HMRC internal manual

Business Income Manual

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

If an asset is altered or improved then the expenditure is capital; it is not allowable expenditure.

In some cases, if the asset had not been altered or improved, then the trader would still have had to have the asset repaired. The cost of these repairs would have been allowable. A deduction cannot be given for the cost of the repairs the trader would have had to pay for; the ’notional repairs’.

This is because the trader did not have the asset repaired and the treatment for tax purposes follows what happened, not what might have happened. As the trader chose to have the asset altered or improved, the expenditure is capital and not an allowable deduction.

For further information on the case law on notional repairs, see BIM35465.


Kate recognises that she needs to have her office roof repaired. Rather than simply carrying out the repairs, she decides to have the roof space opened up and additional windows put in so she can use it as office space.

Kate cannot claim the cost of the roof repairs, as the roof is not repaired. She has chosen instead to have expansion work done. That is what has actually happened. The work is an improvement and the expenditure is capital. Kate cannot claim the cost that she would have spent on repairs because she has chosen not to carry out those repairs.