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Capital Gains Tax & Double Glazing

I'm completing my CGT return in connection with the sale last year of my late Mother's property. I had always assumed that the cost of double glazing for this property, (which was done in the years 2000 to 2002), being a capital expenditure, would be allowable in reducing the tax payable. However, a recent call to HMRC produced the response that this is not the case, and that "improvements" only applied to such things as the building of an extension or garage. When I replied that we had not previously been allowed to offset this against rent received, the adviser said "you should have done", I was puzzled, as the relevant passages in the Taxation of Rents guide, IR150 state:

Capital Expenses:

(128) It is a general income tax principle that you can't deduct capital expenses in computing your taxable income.....

and

(145) Where a significant improvement arises from the change of materials, the whole cost is capital expenditure.......for example, if you replace single glazed softwood windows with double glazed PVC windows. the improvement element normally means that the entire cost is capital expenditure.

Am I missing something here? Surely, not having been able to offset against rent, I should now be allowed to offset against CGT. I haven't been able to find any definition of what constitutes an improvement in any HMRC document.

I emphasize that the work involved was a complete replacement of wooden single glazed windows with sealed double glazed PVC units.

Any help and advice would be appreciated.

Reply to
Mike O'Sullivan
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No.

IMHO the tax official that you spoke to was wrong. AIUI the complete replacement of windows with DG units is an improvement which is deductible for CGT purposes.

(FWIW There is almost no chance that anyone will check your calculation!)

tim

Reply to
tim.....

Really! that's interesting. Many thanks for the reply.

Mike

Reply to
Mike O'Sullivan

Your honest opinion is noted but HMRC manuals state:

Property Income Manual 2020 "An example is double-glazing. In the past we took the view that replacing single-glazed windows with double-glazed windows was an improvement and therefore capital expenditure. But times have changed. Building standards have improved and the types of replacement windows available from retailers have changed. We now accept that replacing single-glazed windows by double-glazed equivalents counts as allowable expenditure on repairs."

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Business Income Manual 46904 "Kate has the windows of her offices replaced. The old windows were singled glazed. She just wants to replace the old units. Building standards have improved and the types of replacement windows available from retailers have changed. The replacement windows are double-glazed. This shows the effect of changes in technology. At one time replacing single-glazed windows with double-glazed windows was regarded as an improvement and therefore capital expenditure. But times have changed. Double-glazing is now standard and is the modern equivalent. Replacing single-glazed windows by double-glazed equivalents counts as allowable expenditure on repairs. "
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Reply to
Alan Ferris

OK, but how does this work if you put the windows in at the time that they were a capital expense?

tim

Reply to
tim.....

Interesting... but does eligibility as revenue expenditure necessarily exclude treatment (in the alternative) as capital?

If I choose to capitalise my bambi stapler - even though expensing it would be normal - I don't think that excludes a Cap Allowance claim.

And surely there's a point at which replacement of windows becomes improvement? Indeed, as technology moves forward apace, ISTM that there's very little "replacement" which can actually be achieved like-for-like.

Reply to
Martin

Yes, that is why I'm confused. Seems a Catch 22 situation, if, at the time of the improvement It's capital, and excluded from income tax relief, but by the time of the CHT liability it becomes a repair, and excluded here too.

Reply to
Mike O'Sullivan

Then you claim them as capital. But you need to show when you installed them if they investigate.

Reply to
Alan Ferris

... and when was the cutover (when did that paragraph appear)?

The building regs requirement for improved insulation (in Part L) including windows, which is what I presume that is referring to, came in in April 2002.

Reply to
Andrew Gabriel

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