I had an outbuilding demolished at my buy-to- let property to create car parking spaces for the tenant. Is the demolition of the outhouse (an old brick shed) considered a capital expense that can be offset against unearned income?
Arthur Weller replies:
Assuming that the demolition resulted in an overall improvement in the property, this is classified as ‘enhancement expenditure’. See HMRC’s Capital Gains Manual at CG15200. Consequently, it is only relievable against a capital gain when the property is eventually sold. See HMRC’s guidance at CG15180.
