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HMRC internal manual

Business Income Manual

Specific deductions: repairs and renewals: statutory renewals allowance

S68 Income Tax (Trading and Other Income) Act 2005, S68 Corporation Tax Act 2009

This legislation has been repealed and no longer applies to expenditure incurred on or after

  • 1 April 2016 for corporation tax purposes, and
  • 6 April 2016 for income tax purposes.

A deduction in computing the profits of a trade is allowed for expenses incurred on the replacement or alteration of small assets in certain limited circumstances where the expenditure would otherwise be disallowed as capital. This ‘renewals allowance’ applies only to deductions for expenditure on the replacement or alteration of tools, meaning ‘implements, utensils or articles’. No deduction is due for the initial cost of the items.

The type of assets that qualify for a deduction under the renewals basis depends on the precise nature of the business being carried on. Common examples of expenditure that would typically qualify for a deduction are:

  • glasses in a public house;
  • spanners used by a car mechanic;
  • cutlery in a cafe.

Examples of items that HMRC would not regard as eligible for renewals allowance are:

  • a hairdresser’s chair in a beauty salon;
  • lorries in a haulage firm;
  • ovens in a bakery;
  • Free-standing white goods in a let residential property, e.g. cookers, fridge freezers, etc, that are not integrated.

The statutory renewals allowance is not available for businesses using the cash basis.

For guidance on the non-statutory renewals allowance, see BIM46980.