New shed tax question

[Kidds]

If I put up a new (brick) shed what part of the costs are allowable against tax and for how long?
More to the point the cost of the brick layer to build it. If the shed is a capital item is the cost of the brickie part of it or just a labour bill?

And am I right in thinking they are treated different for tax purposes.

 

[Tarw Coch]

I’m pretty sure labour would be treated as part of the shed build for tax purposes.
It was when there was no tax allowances on new buildings.

 

[solo]

Labour is a contract cost to the business, whereas the building frame and cladding are capitalised according to my accountant. Capital allowance is 3% per annum on buildings. Groundwork’s in preparing the site for the footings could be classified as repairs . It would be worth speaking to your accountant for further guidance.

 

[Goweresque]

Here is the guide to claiming Structures and Buildings Allowance (the new 3% allowance per year on the cost of a new building):

Claiming capital allowances for structures and buildings

If you build, buy or lease a structure and all construction contracts were signed on or after 29 October 2018, you may be able to claim tax relief.

www.gov.uk

You will see that qualifying items include

• fees for design
• preparing the site for construction
• construction works
• renovation, repair and conversion costs
• fitting out works

Thus as construction costs (and site preparation) are included in SBA, they cannot also be allowable expenses for annual income tax.

The cost of erection a new building includes ALL the costs of doing so, labour and materials, and of all works required to go from the original site to the new building. All those must come out of taxed income, and subsequently may be used for an SBA claim.

 

[Exfarmer]

Go carefully , only repairs are allowable as part of trading costs. Many people stretch the rules but if you are caught it can be expensive.
If there was substantially similar building there before which has been replaced because it is falling down , then it may be justifiable to claim it was repair. If however it is a substantial upgrade, take care.

 

[Highland Mule]

Groundwork’s in preparing the site for the footings could be classified as repairs .

And that would most likely be tax fraud.

 

[neilo]

If I put up a new (brick) shed what part of the costs are allowable against tax and for how long?
More to the point the cost of the brick layer to build it. If the shed is a capital item is the cost of the brickie part of it or just a labour bill?

And am I right in thinking they are treated different for tax purposes.

I’m sure you would be better off doing the brick work (& groundworks) yourself, even if it meant you had to employ those same contractors to do some repairs elsewhere on the farm.....

 

[Flat 10]

I think @Goweresque makes it clear but there’s no wrangle with building a new bigger shed on the site of an older smaller one? As in a percentage is repair a percentage is improvement?

 

[Goweresque]

I think @Goweresque makes it clear but there’s no wrangle with building a new bigger shed on the site of an older smaller one? As in a percentage is repair a percentage is improvement?

Not according to my accountant. I've asked the question many times, and got the same answer every time. I've got an old set of run down buildings and I'd like to stick up a new set of buildings, but only pure repairs of whats there would come out of taxable income. Knocking everything down and building exactly the same square footage of building would have to come out of taxed income. So they moulder away.....

 

[Steevo]

Not according to my accountant. I've asked the question many times, and got the same answer every time. I've got an old set of run down buildings and I'd like to stick up a new set of buildings, but only pure repairs of whats there would come out of taxable income. Knocking everything down and building exactly the same square footage of building would have to come out of taxed income. So they moulder away.....

Exactly right as I understand it.

Repairs are just that - repairs.

Replacement is a whole different kettle of fish.


If you chose to do a Trigger's broom and renew the roof one year, that's a repair. If you then did the side cladding the next that's also a repair. Provided you're doing like-for-like and therefore neither are classed as an improvement.

It's pretty clear when looking at a whole new building that it is not a repair.

 

[Tarw Coch]

Labour is a contract cost to the business, whereas the building frame and cladding are capitalised according to my accountant. Capital allowance is 3% per annum on buildings. Groundwork’s in preparing the site for the footings could be classified as repairs . It would be worth speaking to your accountant for further guidance.

Depending on your point of view you have either got a good or bad accountant.
If you’re lucky he will save you some tax
If you’re unlucky you’ll end up in trouble with HMRC

 

[Kidds]

There won't be enough income to pay any tax this year and quite possibly next year will be the same.
Thank you for the replies. I will speak to my accountant on Monday and your replies help me to know what to ask.

 

[Exfarmer]

Remember, the accountant only does the books on information you supply. Be honest and truthful with him , and he can give you the right answer.
An accountant is not an auditor, who is paid to sort out these issues in your business.

 

[AF Salers]

Could you use concrete panels instead of bricks? They are fully allowable as are classed as moveable/temporary structure

 

[Lazy Sod]

Not so easy to put windows in them at a later date.