I was at a very unusual course last week. There wasn’t a single tee, bunker or fairway to be seen!
In fact there was a lot of grass about, but that’s because it was being held at Haydock Park Racecourse. It was the first time that I’d heard the speaker talk and I have to take my hat off to Mr Giles Mooney of PTP. He’s a great speaker and put across his points in an entertaining and well thought out manner. I’ll certainly be looking out for his name again next year when I’m booking my CPD courses (and you thought that I just made this stuff up?).
There were a couple of points that he raised that I want to pass on. Firstly, in the ever changing world of property lettings. From April 2013, the idea of a tax deduction for a replacement asset disappears for both furnished and unfurnished lettings. Repairs will still be allowed, as will the 10% wear and tear allowance that many furnished lettings landlords claim instead of keeping tabs on all of their expenditure.
So, imagine if you will, a serious boiler malfunction. For the purposes of this example let’s say it costs £2000 to replace it and £1800 to repair it. In the current year, you may be tempted to spend the extra £200 and replace it on the understanding that you will probably make some savings in the future with the fuel efficiency of the new boiler. However, from next April, the replacement will not attract any tax relief whereas the repair will. Assuming you pay tax at 40%, then the actual cost will be £1080 and so you would be much more likely to go for the repair.
There appears to be a small window of opportunity for landlords to review their properties before March 2013 to see if anything needs replacing. If it does then it would be beneficial to do so whilst tax relief is available. If you miss out, then you are much more likely to have to repair items than replace them.