Have you underclaimed your expenses?
In 2022/23, HMRC sent a nudge letter to taxpayers that included a statement saying that upgrading a boiler wouldn’t be a deductible expense for tax purposes, i.e. as a deduction from rental income. It is now writing to individuals admitting that this was wrong. What action do you need to take?
The initial letter was a prompt to check property letting expenses that had been claimed on the 2021/22 tax return. It contained the statement that “upgrading a central heating boiler from an older, less efficient model’ is an example of an expense you can’t claim tax relief for”. Essentially, the implication is that an improvement is not a repair, and so is a capital expense. HMRC has now owned up to the mistake, and has confirmed that such an expense would generally be accepted as a repair.
If you haven’t claimed for the cost of a replacement boiler, you could be owed a tax refund. Check your returns and if you have underclaimed your expenses, take action accordingly. If it is for 2022/23, you can simply amend the return. However, if it’s your 2021/22 return that is affected, you should contact the specialist team by email at responseteam5@hmrc.gov.uk.
Related Topics
-
HMRC moves tax return registration into the digital age
A new and improved self-assessment registration service has been launched. What's changed?
-
Unpaid directors still face new tax return reporting
HMRC has clarified that company directors who are already required to submit a self-assessment tax return must provide details of their directorships for 2025/26 even where they received no salary, benefits or dividends. Directors of dormant companies can also be caught. What do you need to know?
-
Do dividend waivers still work?
You need to take a dividend from your company but there’s just one problem. Your business partner, who is also a 50% shareholder, doesn’t want to take any more income from the company during this tax year. What’s the solution?