Specialist Tax News

Plant And Machinery Used In A Dwelling-House

This is specifically debarred from entitlement to capital allowances, unless the property is within the furnished holiday lettings regime. A dwelling-house is not defined under tax legislation, and HMRC accepts that university halls of residence and similar facilities are not dwelling-houses for this purpose.

Student accommodation generally does come within the prohibition, but not communal areas or parts to which the students do not have access. This has provided some scope for getting tax relief as a student landlord, but HMRC have recently attempted to remove uncertainty – unfortunately by claiming that each student flat in multiple occupation is a dwelling-house, given that the individual study bedrooms alone would not afford the occupants the facilities required for day-to-day private domestic existence. Therefore the communal kitchen and lounge are also part of the dwelling-house according to HMRC but not the common parts of the building such as the common entrance lobby, stairs or lifts.

HMRC has supplied an example:

Bob is a landlord owning a block of residential flats and a nursing home. He buys the following:

  • New cookers for the flats
  • A new fire alarm system for the block of flats
  • New beds for the nursing home

No capital allowances claim can be made for the cookers, but a claim can be made for the other expenditure because none of it is for use in a dwelling house.
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This new approach does not stop a claim being made for capital allowances on expenditure before 22 October 2010 and we can make sure that any claim is maximized.

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